Glass House Brands (GHBWF) posts wider Q1 2026 loss but lifts cash via equity sales

Q: How did Glass House Brands (GHBWF) perform financially in Q1 2026?

Glass House Brands reported Q1 2026 revenue of $40.5 million and a net loss attributable to the company of $17.1 million . Revenue declined from $44.8 million in Q1 2025 and the loss widened from $10.1 million , reflecting weaker gross margins and higher interest and tax costs.

Q: What was Glass House Brands’ cash and liquidity position as of March 31, 2026?

As of March 31, 2026, Glass House Brands held $24.4 million of cash and $3.5 million of non-current restricted cash. It used $11.8 million of cash in operating activities but raised $18.4 million net through at-the-market share issuances, ending with total assets of $325.4 million .

Q: How much debt does Glass House Brands (GHBWF) have and what are the key terms?

Total notes payable were $68.8 million at March 31, 2026, including a $50 million Senior Secured Credit Facility and $14.7 million in convertible debentures. The credit facility matures in 2030 , carries a floating rate swapped to an effective 8.58% , and is secured by key greenhouse assets.

Q: What were Glass House Brands’ operating cash flows and capital spending in Q1 2026?

In Q1 2026, Glass House Brands used $11.8 million of cash in operating activities, reflecting its net loss and working capital changes. Capital expenditures were $3.5 million , partly offset by $0.8 million of proceeds from a note receivable, leading to negative free cash flow before financing.

Filing Impact

(Neutral)

Filing Sentiment

(Neutral)

Form Type

6-K

Rhea-AI Filing Summary

Glass House Brands Inc. reports Q1 2026 interim results showing revenue of $40.5 million, down from $44.8 million a year earlier, and a net loss attributable to the company of $17.1 million versus $10.1 million in Q1 2025. Gross profit fell to $10.0 million as cost of goods sold increased, while operating expenses stayed roughly flat, widening the operating loss to $14.4 million. Operating cash flow was negative $11.8 million, but the company boosted liquidity through an at-the-market equity program, raising $18.4 million net and lifting cash to $24.4 million at quarter-end. Total assets were $325.4 million and total liabilities $147.9 million, with notes payable of $68.8 million. A waiver and amendment kept the $50 million Senior Secured Credit Facility classified as noncurrent despite a prior covenant breach.

Insights

Quarter shows weaker margins and higher losses, partly offset by fresh equity capital.

Glass House Brands generated Q1 2026 revenue of $40.5M, down from $44.8M, while gross profit halved to $10.0M. Cost of goods sold rose sharply, compressing margins and pushing the operating loss to $14.4M from $3.1M.

Net loss attributable to the company widened to $17.1M, and operating activities used $11.8M of cash. To support liquidity, the company raised $18.4M net via an at-the-market share program and ended the quarter with cash of $24.4M and total assets of $325.4M.

Total notes payable were $68.8M, including a $50M Senior Secured Credit Facility fixed at an effective 8.58% via an interest rate swap expiring in 2030. A covenant breach as of December 31, 2025 was waived and testing of one coverage ratio is suspended until the quarter ending December 31, 2026, reducing near-term refinancing pressure but highlighting ongoing leverage sensitivity.

Key Figures

Revenue: $40.5M Net loss attributable to the company: $17.1M Net cash from operating activities: ($11.8M) +5 more

8 metrics

Revenue $40.5M Three months ended March 31, 2026

Net loss attributable to the company $17.1M Three months ended March 31, 2026

Net cash from operating activities ($11.8M) Three months ended March 31, 2026

Cash balance $24.4M As of March 31, 2026

Total assets $325.4M As of March 31, 2026

Total notes payable $68.8M As of March 31, 2026

ATM equity proceeds (net) $18.4M Three months ended March 31, 2026

Senior Secured Credit Facility $50.0M Principal outstanding; effective 8.58% rate via swap

Key Terms

Senior Secured Credit Facility, interest rate swap, market-based performance restricted stock units, variable interest entity, +1 more

5 terms

Senior Secured Credit Facility financial

"the Company refinanced its Prior Credit Agreement and entered into a new senior secured credit facility for an aggregate principal amount of $50 million"

A senior secured credit facility is a loan or revolving line of credit where lenders have first legal claim on specific company assets (collateral) and the debt ranks above other obligations for repayment. For investors it signals where a lender sits in the repayment pecking order and how much protection creditors have if the company struggles, affecting credit costs, the company’s ability to borrow more, and potential recoveries in a default — like a mortgage taking priority over other claims on a house.

interest rate swap financial

"The Company utilizes an interest rate swap, expiring on February 28, 2030, to manage its exposure to variability in future cash flows"

An interest rate swap is a financial agreement where two parties exchange interest payments on a set amount of money over time. Typically, one side pays a fixed interest rate, while the other pays a variable rate that can change with market conditions. This helps investors manage or reduce their exposure to interest rate fluctuations, much like locking in a mortgage rate to avoid future cost increases.

market-based performance restricted stock units financial

"The Company’s market-based performance restricted stock units vest contingent upon the achievement of pre-determined market and service conditions"

variable interest entity financial

"The Company has concluded these entities to be VIEs as the Company possesses the power to direct activities through various agreements"

A variable interest entity (VIE) is a company structure where one party controls another company’s operations and economic outcomes through contracts or special arrangements instead of owning a majority of its voting shares. For investors, VIEs matter because the controlling party’s financial results, debts and risks can appear in the controller’s reports even though ownership looks separate, so understanding VIEs helps assess true exposure, governance limits and transparency—like spotting a puppet controlled by strings rather than direct ownership.

at-the-market distribution program financial

"The Company commenced an at-the-market distribution program in December 2024 by means of a prospectus supplement"

Form 6-K: How Foreign Companies Report to the SEC →

05/13/2026 - 05:07 PM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2026.

Commission File Number 000-56261

Glass House Brands Inc.

(Translation of registrant’s name into English)

3645 Long Beach Blvd.

Long Beach, California 90807

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

¨ Form 20-F x Form 40-F

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			Glass House Brands Inc.

Date: May 13, 2026			/s/ Kyle Kazan
			By: Kyle Kazan
			Title: Chief Executive Officer

EXHIBIT INDEX


Exhibit Number						Description

99.1						Unaudited Condensed Interim Consolidated Financial Statements as of March 31, 2026 and December 31, 2025 and for the Three Months Ended March 31, 2026 and 2025

99.2						Management’s Discussion and Analysis of Financial Condition and Unaudited Results of Operations for the Three Months Ended March 31, 2026 and 2025

99.3						Form 52-109F2 Certification of Interim Filings – CFO

99.4						Form 52-109F2 Certification of Interim Filings – CEO

Exhibit 99.1

GLASS HOUSE BRANDS INC.

UNAUDITED CONDENSED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS

AS OF

MARCH 31, 2026 AND DECEMBER 31, 2025

AND FOR THE THREE MONTHS ENDED
MARCH 31, 2026 AND 2025

GLASS HOUSE BRANDS INC.

Table of Contents


			Page(s)
Unaudited Condensed Interim Consolidated Balance Sheets			1
Unaudited Condensed Interim Consolidated Statements of Operations			2
Unaudited Condensed Interim Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity			3 - 4
Unaudited Condensed Interim Consolidated Statements of Cash Flows			5 - 6
Notes to Unaudited Condensed Interim Consolidated Financial Statements			7 – 34

GLASS HOUSE BRANDS INC.

Unaudited Condensed Consolidated Balance Sheets

(Amounts Expressed in United States Dollars in Thousands, Except Par Value and Share Data, Unless Otherwise Stated)


	March 31, 2026		December 31, 2025
ASSETS
Current Assets:
Cash	$	24,427	$	19,850

Accounts Receivable, Net	6,441		4,417
Income Taxes Receivable	766		791
Prepaid Expenses and Other Current Assets	11,181		15,664
Inventory	31,537		26,227
Notes Receivable	—		800
Total Current Assets	74,352		67,749
Operating Lease Right-of-Use Assets, Net	4,131		3,875
Finance Lease Right-of-Use Assets, Net	1,830		2,036

Property, Plant and Equipment, Net	229,479		228,760
Intangible Assets, Net	11,626		11,577
Restricted Cash, Net of Current Portion	3,500		3,500
Other Assets	435		1,060
TOTAL ASSETS	$	325,353	$	318,557
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities	$	38,067	$	35,970



Current Portion of Operating Lease Liabilities	1,303		1,116
Current Portion of Finance Lease Liabilities	799		836
Current Portion of Notes Payable	38		37
Total Current Liabilities	40,207		37,959
Operating Lease Liabilities, Net of Current Portion	2,933		2,868
Finance Lease Liabilities, Net of Current Portion	909		1,086
Other Non-Current Liabilities	36,037		33,413
Notes Payable, Net of Current Portion	67,819		68,629
TOTAL LIABILITIES	147,905		143,955
MEZZANINE EQUITY:


GH Group, Inc. Preferred Series D Shares ($0.00001 par value, 15,000 shares authorized, 15,000 shares issued and outstanding as of March 31, 2026 and December 31, 2025)	15,000		15,000
GH Group, Inc. Series E Convertible Preferred Shares ($0.00001 par value, 80,000 shares authorized, 77,500 shares issued and outstanding as of March 31, 2026 and December 31, 2025)	77,500		77,500
SHAREHOLDERS’ EQUITY:
Multiple Voting Shares (no par value, unlimited shares authorized, 4,754,979 shares issued and outstanding as of March 31, 2026 and December 31, 2025)	—		—
Subordinate Voting Shares (no par value, unlimited shares authorized, 78,296,141 and 75,282,908 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively)	—		—
Exchangeable Shares (no par value, unlimited shares authorized, 6,366,732 and 6,445,878 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively)	—		—
Additional Paid-In Capital	314,075		294,011
Accumulated Deficit	(237,207)		(220,075)

Total Shareholders’ Equity Attributable to the Company	76,868		73,936
Non-Controlling Interest	8,080		8,166
TOTAL MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY	177,448		174,602
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY	$	325,353	$	318,557

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

- 1 -

GLASS HOUSE BRANDS INC.

Unaudited Condensed Interim Consolidated Statements of Operations

(Amounts Expressed in United States Dollars in Thousands, Except Share and Per Share Data, Unless Otherwise Stated)


	Three Months Ended
	March 31,
	2026		2025

Revenues, Net	$	40,515	$	44,818
Cost of Goods Sold (Exclusive of Depreciation and Amortization Shown Separately Below)	30,499		24,753
Gross Profit	10,016		20,065
Operating Expenses:
General and Administrative	16,950		15,083
Sales and Marketing	529		687
Professional Fees	2,865		1,668
Depreciation and Amortization	4,022		3,837

Impairment Expense for Intangible Assets	—		1,900
Total Operating Expenses	24,366		23,175
Loss from Operations	(14,350)		(3,110)
Other (Income) Expense:
Interest Expense	1,295		2,276
Interest Income	—		(288)
Gain on Equity Method Investments	—		(40)
(Gain) Loss on Change in Fair Value of Derivative Asset and Liability	(409)		1,733
Gain on Change in Fair Value of Contingent Liabilities and Shares Payable	—		(95)
Loss on Extinguishment of Debt	—		292
Other (Income) Expense, Net	(1,288)		92
Total Other (Income) Expense, Net	(402)		3,970
Loss From Operations Before Provision for Income Taxes	(13,948)		(7,080)
Provision for Income Taxes	3,058		2,928
Net Loss	(17,006)		(10,008)
Net Income to Non-Controlling Interest	126		52
Net Loss Attributable to the Company	$	(17,132)	$	(10,060)

Loss Per Share - Basic	$	(0.23)	$	(0.18)
Loss Per Share - Diluted	$	(0.23)	$	(0.18)

Weighted-Average Shares Outstanding - Basic	87,122,436		81,144,495
Weighted-Average Shares Outstanding - Diluted	87,122,436		81,144,495

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

- 2 -

GLASS HOUSE BRANDS INC.

Unaudited Condensed Interim Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity

(Amounts Expressed in United States Dollars in Thousands, Except Share Data, Unless Otherwise Stated)


	Units									$ Amount
	Multiple Voting Shares	Equity Shares	Exchange- able Voting Shares	Additional Paid-In Capital		Accumulated Deficit		TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS		Mezzanine Equity Preferred Series D		Mezzanine Equity Preferred Series E		Non-Controlling Interest		TOTAL MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
BALANCE AS OF DECEMBER 31, 2025	4,754,979	75,282,908	6,445,878	$	294,011	$	(220,075)	$	73,936	$	15,000	$	77,500	$	8,166	$	174,602





























Net Income (Loss)	—	—	—	—		(17,132)		(17,132)		—		—		126		(17,006)

Share-Based Compensation from Options and Restricted Stock Units	—	—	—	4,243		—		4,243		—		—		—		4,243






Shares Issued for Exercise of Warrants	—	136,858	—	—		—		—		—		—		—		—
Shares Issued for Conversion of Exchangeable Shares	—	79,146	(79,146)	—		—		—		—		—		—		—
Shares Issued for Vesting of Restricted Stock Units	—	598,402	—	—		—		—		—		—		—		—
Shares Issued for Exercise of Options	—	112,090	—	350		—		350		—		—		—		350

Shares Issued for At-the-Market Program	—	2,086,737	—	18,359		—		18,359		—		—		—		18,359


Distributions to Non-Controlling Interest Holders	—	—	—	—		—		—		—		—		(212)		(212)
Dividends - Preferred Shareholders	—	—	—	(2,888)		—		(2,888)		—		—		—		(2,888)
BALANCE AS OF MARCH 31, 2026	4,754,979	78,296,141	6,366,732	$	314,075	$	(237,207)	$	76,868	$	15,000	$	77,500	$	8,080	$	177,448

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

- 3 -

GLASS HOUSE BRANDS INC.

Unaudited Condensed Interim Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity

(Amounts Expressed in United States Dollars in Thousands, Except Share Data, Unless Otherwise Stated)


	Units									$ Amount
	Multiple Voting Shares	Equity Shares	Exchange- able Voting Shares	Additional Paid-In Capital		Accumulated Deficit		TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS		Mezzanine Equity Preferred Series B			Mezzanine Equity Preferred Series C			Mezzanine Equity Preferred Series D			Non-Controlling Interest		TOTAL MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
BALANCE AS OF DECEMBER 31, 2024	4,754,979	69,888,086	7,017,866	$	306,652	$	(190,416)	$	116,236	$	65,084		$	6,279		$	15,000		$	(38,544)	$	164,055
Net Income (Loss)	—	—	—	—		(10,060)		(10,060)		—			—			—			52		(10,008)
Share-Based Compensation from Options and Restricted Stock Units	—	—	—	2,105		—		2,105		—			—			—			—		2,105
Contingent Shares Payable in Connection with Camarillo Acquisition	—	—	—	20,265		—		20,265		—			—			—			—		20,265

Shares Issued for Conversion of Exchangeable Shares	—	128,842	(128,842)	—		—		—		—			—			—			—		—
Shares Issued for Vesting of Restricted Stock Units	—	466,181	—	—		—		—		—			—			—			—		—
Shares Issued for Exercise of Options	—	26,604	—	82		—		82		—			—			—			—		82
Shares Issued for Payment of Interest on Convertible Debentures	—	8,495	—	—		—		—		—		—	—		—	—		—	—		—

Dividends - Preferred Shareholders	—	—	—	—		—		—		2,411			228			—			(4,577)		(1,938)
BALANCE AS OF MARCH 31, 2025	4,754,979	70,518,208	6,889,024	$	329,104	$	(200,476)	$	128,628	$	67,495		$	6,507		$	15,000		$	(43,069)	$	174,561

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

- 4 -

GLASS HOUSE BRANDS INC.

Unaudited Condensed Interim Consolidated Statements of Cash Flows

(Amounts Expressed in United States Dollars in Thousands Unless Otherwise Stated)


	Three Months Ended
	March 31,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(17,006)	$	(10,008)
Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities:

Bad Debt Expense, Net of Recoveries	(128)		(67)
Interest Capitalized	(422)		—

Depreciation and Amortization	4,022		3,837
Gain on Equity Method Investments	—		(40)

Impairment Expense for Intangible Assets	—		1,900
Non-Cash Operating Lease Costs	275		418
Loss on Extinguishment of Debt	—		292
Accretion of Debt Discount and Loan Origination Fees	44		237
Gain on Foreign Currency Debt Remeasurement	(1,271)		—
(Gain) Loss on Change in Fair Value of Derivative Asset and Liability	(409)		1,733
Gain on Change in Fair Value of Contingent Liabilities and Shares Payable	—		(95)
Share-Based Compensation	4,523		2,105
Changes in Operating Assets and Liabilities:
Accounts Receivable	(2,096)		(1,424)
Income Taxes Receivable	25		—
Prepaid Expenses and Other Current Assets	1,455		1,086
Inventory	(5,310)		(1,430)
Other Assets	(14)		2,062
Accounts Payable and Accrued Liabilities	1,855		(587)
Interest Payments on Finance Leases	(52)		(71)
Income Taxes Payable	—		27
Operating Lease Liabilities	(279)		(405)
Other Non-Current Liabilities	3,033		2,901
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(11,755)		2,471
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Property and Equipment	(3,546)		(6,695)
Proceeds from Note Receivable	800		—


NET CASH USED IN INVESTING ACTIVITIES	(2,746)		(6,695)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the Issuance of At-the-Money Shares	22,302		—
Proceeds from the Issuance of Notes Payable	—		49,140

Payments for Debt Modification Fees	(250)		—

Payments on Finance Leases	(214)		(300)
Payments on Notes Payable	(10)		(42,068)

Cash Received for Exercise of Options and Warrants	350		82
Distributions to Non-Controlling Interest Holders	(212)		—
Distributions to Preferred Shareholders	(2,888)		(1,938)
NET CASH PROVIDED BY FINANCING ACTIVITIES	19,078		4,916
NET INCREASE IN CASH, RESTRICTED CASH AND CASH EQUIVALENTS	4,577		692
Cash, Restricted Cash and Cash Equivalents, Beginning of Period	23,350		36,923
CASH, RESTRICTED CASH AND CASH EQUIVALENTS, END OF PERIOD	$	27,927	$	37,615

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

- 5 -

GLASS HOUSE BRANDS INC.

Unaudited Condensed Interim Consolidated Statements of Cash Flows

(Amounts Expressed in United States Dollars in Thousands Unless Otherwise Stated)


	Three Months Ended
	March 31,
	2026		2025
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION
Cash Paid for Interest	$	1,134	$	876

Non-Cash Investing and Financing Activities:
Notes Payable Issued for the Purchase of Property and Equipment	1,120		—
Receipt of Intellectual Property License in Settlement of Note Receivable	200		—
Contingent Shares Payable in Connection with Camarillo Acquisition	—		20,265
Recognition of Right-of-Use Assets for Finance Leases	—		48

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

- 6 -

GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

1. NATURE OF OPERATIONS

Glass House Brands Inc. (the “Company”), formerly known as Mercer Park Brand Acquisition Corp. (“Mercer Park”), was incorporated under the Business Corporations Act (British Columbia) on April 16, 2019. As of March 31, 2026, the Company is a vertically integrated cannabis company that generates cannabis revenue in the state of California and has a certain intellectual property licensing agreement in Florida. The Company, through its subsidiaries, cultivates, manufactures, and distributes cannabis bulk flower and trim to wholesalers and consumer packaged goods to third-party retail stores in the state of California. The Company also owns and operates retail cannabis stores and provides dispensary operation management services in the state of California. The Company’s subordinate voting shares (“Subordinate Voting Shares”), restricted voting shares (“Restricted Voting Shares”) and limited voting shares (“Limited Voting Shares,” and collectively with the Subordinate Voting Shares and the Restricted Voting Shares, the “Equity Shares”), and certain common share purchase warrants (the “Listed Warrants”) are listed on Cboe Canada, trading under the symbols “GLAS.A.U” and “GLAS.WT.U,” respectively. The Equity Shares and Listed Warrants also trade on the OTCQX in the United States under the symbols “GLASF” and “GHBWF,” respectively. The head office and principal address of the Company is 3645 Long Beach Boulevard, Long Beach, California 90807. The Company’s registered office in Canada is 666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8, Canada.

Liquidity

Historically, the Company’s primary source of liquidity has been from its operations, capital contributions made by equity investors and preferred equity investors, and debt issuances. The Company is meeting its operational obligations as they become due from its current working capital and from operations. However, the Company has sustained losses since inception and may require additional capital in the future. As of and for the three months ended March 31, 2026, the Company had an accumulated deficit of $237.2 million, a net loss attributable to the Company of $17.1 million and net cash used in operating activities of $11.8 million. The Company estimates that based on current business operations and working capital, it will continue to meet its obligations as they become due for at least the next 12 months.

The Company is generating cash from revenues and deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are primarily being utilized for capital expenditures, facility improvements, product development and marketing. The Company expects to continue to finance its operations, capital expenditures, facility improvements, product development and marketing primarily through cash from sales to customers and may consider future equity issuances and debt financing arrangements.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages its liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due. In the event sufficient cash flow is not available from operating activities, the Company may continue to raise equity or debt capital from investors in order to meet liquidity needs. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects. There can be no assurance that such financing will be available or will be on terms acceptable to the Company.

The significant accounting policies and critical estimates applied by the Company in these unaudited condensed interim consolidated financial statements as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025, and the accompanying notes (the “Unaudited Condensed Interim Consolidated Financial Statements”), are the same as those applied in the Company’s audited consolidated financial statements and accompanying notes for the years ended December 31, 2025 and 2024 (the “Consolidated Financial Statements”), unless disclosed otherwise below. The Consolidated Financial Statements filed on March 24, 2026, can be found on the Company’s SEDAR+ profile at www.sedarplus.ca.

- 7 -

GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The accompanying Unaudited Condensed Interim Consolidated Financial Statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect the accounts and operations of the Company and those of the Company’s subsidiaries in which the Company has a controlling financial interest. Investments in entities in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method.

All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of March 31, 2026 and December 31, 2025, the consolidated results of operations for the three months ended March 31, 2026 and 2025 and cash flows for the three months ended March 31, 2026 and 2025 have been included.

The accompanying Unaudited Condensed Interim Consolidated Financial Statements do not include all of the information required for full annual financial statements. Accordingly, certain information, footnotes and disclosures normally included in the annual financial statements, prepared in accordance with GAAP, have been condensed or omitted. The financial data presented herein should be read in conjunction with the Company’s audited Consolidated Financial Statements for the year ended December 31, 2025, and the related notes thereto, and have been prepared using the same accounting policies described therein.

Basis of Consolidation

These Unaudited Condensed Interim Consolidated Financial Statements as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025 include the accounts of the Company, its wholly-owned subsidiaries and entities over which the Company has control as defined in Accounting Standards Codification (“ASC”) 810, Consolidation. Subsidiaries over which the Company has control are fully consolidated from the date control commences until the date control ceases. Control exists when the Company has ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than fifty percent of the outstanding voting securities of another entity. In assessing control, potential voting rights that are currently exercisable are considered.

Non-Controlling Interests

Non-controlling interests represent equity interests owned by parties that are not shareholders of the ultimate parent. The share of net assets attributable to non-controlling interests is presented as a component of equity. Their share of net income or loss is recognized directly in equity. Changes in the parent company’s ownership interest that do not result in a loss of control are accounted for as equity transactions.

Restricted Cash

Restricted cash balances are those which meet the definition of cash and cash equivalents but are not available for use by the Company. As of March 31, 2026 and December 31, 2025, restricted cash was $3.5 million in each period which is held in escrow accounts and used as an interest reserve primarily for the Senior Secured Credit Facility (as defined below). See Note 11 – Notes Payable and Convertible Debentures for further discussion.

Accounts Receivable

The Company extends non-interest-bearing trade credit to its customers in the ordinary course of business which is not collateralized. Accounts receivable are shown on the face of the Unaudited Condensed Consolidated Interim Balance Sheets, net of an allowance for credit losses. The Company analyzes the aging of accounts receivable, historical credit losses, customer creditworthiness and current economic trends in determining the allowance for credit losses. The Company does not accrue interest receivable on past due accounts receivable.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Accounts receivable, net is as follows (in thousands):


	March 31, 2026		December 31, 2025
Accounts Receivable Amortized Cost	$	6,796	$	4,831
Allowance for Credit Losses	(355)		(414)
Accounts Receivable, Net	$	6,441	$	4,417

The following table summarizes the changes in the allowance for credit losses for accounts receivable (in thousands):


	Three Months Ended
	March 31,
	2026		2025
Balance, Beginning of Period	$	(414)	$	(472)
(Provision for) Benefit from Expected Credit Losses	(72)		69
Write-offs	131		31
Balance, End of Period	$	(355)	$	(372)

Interest Rate Derivative

The Company utilizes an interest rate swap, expiring on February 28, 2030, to manage its exposure to variability in future cash flows from interest rate fluctuations on its Senior Secured Credit Facility (as defined below). This swap effectively converts the variable interest rate on the debt to a fixed rate and is classified as a derivative under ASC 815, Derivatives and Hedging. The Company has not designated this contract for hedge accounting.

The interest rate swap is recorded at fair value within other non-current liabilities on the Unaudited Condensed Consolidated Interim Balance Sheet and changes in fair value are recognized in (gain) loss on change in fair value of derivative asset and liability on the Unaudited Condensed Consolidated Interim Statement of Operations. The Company’s policy is not to enter into derivative instruments for trading or speculative purposes. Cash flows resulting from this derivative instrument are included within net cash provided by (used in) operating activities on the Unaudited Condensed Consolidated Interim Statement of Cash Flows.

Employee Retention Tax Credits

On March 27, 2020, the U.S. government enacted the Coronavirus Aid Relief and Security Act (“CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”). As there is no authoritative guidance under GAAP on accounting for government assistance to for-profit business entities, the Company accounts for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance. Since the filing of the ERCs through March 31, 2026, the Company filed with the Internal Revenue Service credits totaling $11.6 million during the year ended December 31, 2023. During the three months ended March 31, 2026, no amounts were received. During the year ended December 31, 2025, $9.6 million was received, of which $1.4 million was accrued for interest. The Company will not recognize the remaining amount of $3.0 million claimed as of March 31, 2026 until it has been determined that the Company has reasonable assurance that the credits will be realized.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Earnings and Loss per Share

The Company calculates basic earnings or loss per share by dividing net earnings or loss by the weighted-average number of the Equity Shares (including the Exchangeable Shares, as defined herein, on an as-exchanged basis) outstanding during the period. Multiple Voting Shares, as defined herein, are excluded from the calculation of earnings or loss per share as they do not participate in earnings or losses. Diluted loss per share is the same as basic loss per share if the potential issuance of shares related to stock-based award plans, warrants, contingent shares, convertible preferred shares and convertible debentures are anti-dilutive. Diluted earnings per share includes shares related to stock-based award plans, warrants and contingently issuable shares that are determined to be dilutive using the treasury stock method for all equity instruments issuable in equity units and the “if converted” method for the Company’s convertible preferred shares and convertible debentures. See Note 15 – Loss Per Share for further information.

Segmented Information

The Company currently operates in three reportable segments which are retail, wholesale biomass and cannabis-related consumer packaged goods (“CPG”). The retail segment includes Company owned and operated retail cannabis stores in the state of California and dispensary operation management services. The wholesale biomass segment includes the propagation, nursery, flowering canopy, drying, processing and distribution of cannabis biomass. The CPG segment includes the manufacturing, extraction, infusion, conversion, packaging and distribution of the Company’s branded cannabis products. Certain economic characteristics such as production processes, types of products, classes of customers, as well as distribution models differ between segments. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”), who is the Company’s chief executive officer, in deciding how to allocate resources and assess the Company’s financial and operational performance. As of March 31, 2026, all of the Company’s operations are in the United States of America in the State of California. Intercompany sales and transactions are eliminated in consolidation. See Note 19 – Segment Information for further information.

Recently Adopted Accounting Pronouncements

ASU 2025-05

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. The Company adopted ASU 2025-05 on January 1, 2026. The adoption of the standard did not have a material impact on the Unaudited Condensed Interim Consolidated Financial Statements.

ASU 2024-04

In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments. ASU 2024-04 clarifies requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. To account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. The Company adopted ASU 2024-04 on January 1, 2026. The adoption of the standard did not have a material impact on the Unaudited Condensed Interim Consolidated Financial Statements.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Recent Accounting Pronouncements Not Yet Adopted

ASU 2026-01

In April 2026, the FASB issued ASU 20226-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. ASU 2026-01 requires paid-in-kind (“PIK”) dividends on equity-classified preferred stock, including preferred stock classified as temporary equity, to be initially measured based on the PIK dividend rate stated in the preferred stock agreement. ASU 2026-01 is effective for the Company beginning in the first quarter of 2027, with early adoption permitted, and may be applied either prospectively or on a modified retrospective basis. The Company is currently evaluating the impact that the adoption of this guidance will have on its Consolidated Financial Statements.

ASU 2025-12

In December 2025, the FASB issued ASU 2025-12, Codification Improvements. ASU 2025-12 includes amendments that clarify, correct, or make minor improvements to a variety of topics in the FASB Accounting Standards Codification. The amendments are intended to improve the clarity and consistency of the codification and are not expected to result in significant changes to existing accounting practice. ASU 2025-12 is effective for the Company beginning in the first quarter of 2027. Early adoption is permitted. ASU 2025-12 may be applied either prospectively or retrospectively, depending on the specific amendment. The Company does not expect the adoption of this standard to have a material impact on the Consolidated Financial Statements.

ASU 2025-11

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU 2025-11 improves the guidance in ASC 270 by clarifying the applicability of interim reporting requirements, improving the organization and navigability of required interim disclosures, and adding a disclosure principle that requires entities to disclose events since the end of the most recent annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for the Company beginning in the first quarter of 2028. Early adoption is permitted. ASU 2025-11 may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact this standard will have on the Consolidated Financial Statements.

ASU 2025-10

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. ASU 2025-10 establishes authoritative recognition, measurement, presentation, and disclosure guidance in ASC 832 for government grants received by business entities, including guidance on the timing of recognition and the classification of grants related to assets and grants related to income. ASU 2025-10 is effective for the Company beginning in the first quarter of 2029. Early adoption is permitted. ASU 2025-10 may be applied using either a modified prospective approach, a modified retrospective approach, or a full retrospective approach. The Company is currently assessing the impact this standard will have on the Consolidated Financial Statements.

ASU 2025-09

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. ASU 2025-09 amends the guidance in ASC 815 to improve and clarify hedge accounting requirements, including changes related to hedge documentation, effectiveness assessments, and the application of hedge accounting to certain risk management activities. The amendments are intended to better align hedge accounting results with an entity’s risk management strategies. ASU 2025-09 is effective for the Company beginning in the first quarter of 2027. Early adoption is permitted. ASU 2025-09 is required to be applied on a prospective basis. The Company is currently assessing the impact this standard will have on the Consolidated Financial Statements.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

ASU 2025-04

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). ASU 2025-04 revises the definition of the term performance condition for share-based consideration payable to a customer to incorporate conditions that are based on the volume or monetary amount of a customer’s purchases or potential purchases. ASU 2025-04 also eliminates the policy election to account for forfeitures as they occur for share-based consideration payable to a customer that contains a service-condition vesting feature. ASU 2025-04 also clarifies that ASC 606 variable consideration guidance does not apply to share-based payments to customers; instead, vesting probability should be assessed solely under ASC 718, Compensation—Stock Compensation. ASU 2025-04 is effective for the Company beginning in the first quarter of 2027. Early adoption is permitted. ASU 2025-04 may be applied on either a modified retrospective basis or on a retrospective basis. The Company is currently assessing the impact this standard will have on the Consolidated Financial Statements.

ASU 2025-03

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is effected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity (“VIE”) that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company beginning in the first quarter of 2027. Early adoption is permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company is currently assessing the impact this standard will have on the Consolidated Financial Statements.

ASU 2024-03

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization for each income statement line item that contains those expenses in the notes to financial statements on an annual and interim basis. ASU 2024-03 also requires entities to include certain amounts that are required to be disclosed under existing U.S. GAAP to be included in the disaggregated income statement expense line item disclosures, disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclose the amount of selling expenses and the entity’s definition of selling expenses. ASU 2024-03 is effective for the Company beginning with the 2027 annual report. Early adoption is permitted. ASU 2024-03 may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact this standard will have on the Consolidated Financial Statements.

3. CONCENTRATIONS OF BUSINESS AND CREDIT RISK

The Company maintains certain cash balances at its physical locations, which are not currently insured, and with various U.S. banks and credit unions with balances in excess of the Federal Deposit Insurance Corporation and National Credit Union Share Insurance Fund limits, respectively. The failure of a bank or credit union where the Company has significant deposits could result in a loss of a portion of such cash balances in excess of the insured limit, which could materially and adversely affect the Company’s business, financial condition and results of operations. As of March 31, 2026 and December 31, 2025, the Company has not experienced any losses with regards to its cash balances.

The Company provides certain credit terms in the normal course of business to customers located throughout California. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical and projected future trends and other information. For the three months ended March 31, 2026 and 2025, there was one customer that comprised 18% and 20%, respectively, of the Company’s revenues. Revenue for such customer is included in the Company’s wholesale biomass segment. As of March 31, 2026 and December 31, 2025, such customer comprised 30% and 19%, respectively, of the Company’s gross accounts receivable balance.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

4. INVENTORY

Inventory consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Raw Materials	$	6,177	$	7,001
Work-in-Process	18,102		13,859
Finished Goods	7,258		5,367
Total Inventory	$	31,537	$	26,227

5. INVESTMENTS

The Company has various investments in entities in which it holds a significant but non-controlling interest through voting equity or through representation on the entities’ board of directors or equivalent governing bodies. Accordingly, the Company was deemed to have significant influence resulting in the Company accounting for these investments under the equity method.

During the three months ended March 31, 2026 and 2025, the Company recorded gain from equity method investments of nil and $40 thousand, respectively. Equity investments are classified as Level 3 investments in the fair value hierarchy. These investments are recorded at the amount of the Company’s initial investment and adjusted for the Company’s share of the investee’s income or loss and dividends paid.

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Land	$	76,029	$	76,029
Buildings	163,038		163,038
Furniture and Fixtures	1,904		1,838
Leasehold Improvements	15,624		15,627
Equipment and Software	11,354		10,728
Construction in Progress	24,034		20,347
Total Property, Plant and Equipment	291,983		287,607
Less Accumulated Depreciation and Amortization	(62,504)		(58,847)
Property, Plant and Equipment, Net	$	229,479	$	228,760

During the three months ended March 31, 2026 and 2025, the Company recorded depreciation expense of $3.9 million and $3.6 million, respectively. The amount of amortization recognized for finance leases during the three months ended March 31, 2026 and 2025 was $0.2 million in each period. See Note 10 – Leases for further information. During the three months ended March 31, 2026 and 2025, the Company capitalized interest to property and equipment of $0.4 million and nil, respectively.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

7.  INTANGIBLE ASSETS

Intangible assets consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Definite Lived Intangible Assets
Customer Relationships	$	587	$	587
Intellectual Property	4,777		4,777
Total Definite Lived Intangible Assets	5,364		5,364
Less Accumulated Amortization	(3,908)		(3,757)
Definite Lived Intangible Assets, Net	1,456		1,607
Indefinite Lived Intangible Assets
Cannabis Licenses	9,970		9,970
Intellectual Property	200		—
Total Indefinite Lived Intangible Assets	10,170		9,970
Total Intangible Assets, Net	$	11,626	$	11,577

During the three months ended March 31, 2026 and 2025, the Company recorded amortization expense related to intangible assets of $0.2 million in each period.

During the three months ended March 31, 2025, the Company recognized $1.9 million of other than temporary impairment in its cannabis licenses related to its retail reportable segment as a result of updated earnings projections for unforeseen changes in the market from more than expected retail competition.

The following is the future minimum amortization expense to be recognized as of March 31, 2026 for each of the following years (in thousands):


2026 (Remaining)	$	452
2027	470
2028	123
2029	123
2030	123
Thereafter	165
Total Future Amortization Expense	$	1,456

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Accounts Payable	$	12,998	$	13,715
Accrued Liabilities	19,720		17,933
Accrued Payroll and Related Liabilities	3,049		1,934
Sales Tax and Cannabis Taxes	2,300		2,388
Total Accounts Payable and Accrued Liabilities	$	38,067	$	35,970

The Company offers a customer loyalty rewards program that allows members to earn discounts on future purchases. Unused discounts earned by loyalty rewards program members are included in accrued liabilities and recorded as a sales discount at the time a qualifying purchase is made. The value of points accrued as of March 31, 2026 and December 31, 2025 was approximately $0.6 million in each period.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

9. CONTINGENT SHARES PAYABLE AND EARNOUT LIABILITIES

Activity related to the contingent shares and earnout liabilities consisted of the following (in thousands):


Balance at December 31, 2024	$	20,265





Reclassification of Contingent Shares Payable to Additional Paid-In Capital	(20,265)
Balance at March 31, 2025	$	—

Contingent Earnout – Camarillo Transaction

During the year ended December 31, 2021, the Company purchased certain real property in Camarillo, California (the “Camarillo Transaction”). As a consideration for the option to purchase certain real property in conjunction with the Camarillo Transaction (the “Option Right”), the Company was obligated to pay a contingent earnout fee of up to $75 million, payable in Equity Shares, if certain conditions and financial metrics were met. During the quarter ended March 31, 2025, the measurement period concluded, and it was determined that the financial metrics were not met.

Contingent Shares – Camarillo Transaction

As additional consideration for the Option Right, the Company issued 6,500,000 Equity Shares upon the closing of the Camarillo Transaction. The Company allocated the fair value of the Option Right to the assets acquired upon its exercise in September 2021. In addition to the Equity Shares issued for the Option Right, the Company was obligated to issue up to 3,500,000 Equity Shares as a contingent payment, which are subject to certain conditions and events following closing. During the year ended December 31, 2025, the Company issued 500,000 shares related to the contingent payment. The Company is obligated to issue up to an additional 3,000,000 Equity Shares as a contingent payment, which are subject to certain conditions and events. As conditions related to the Equity Shares were expected to be satisfied, in accordance with U.S. GAAP, the Company reclassified the $20.3 million value of the shares from contingent shares payable and earnout liabilities to additional paid-in capital on the Unaudited Condensed Consolidated Interim Balance Sheet during the three months ended March 31, 2025.

10. LEASES

The following table presents components of lease cost (in thousands):


	Three Months Ended
	March 31,
	2026		2025
Finance Lease Cost:
Amortization of Finance Lease Right-of-Use Assets	$	206	$	178
Interest on Lease Liabilities	52		71
Operating Lease Cost	400		649
Short-Term Lease Costs	345		401
Total Lease Expenses	$	1,003	$	1,299

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Additional information related to the Company’s leases is as follows (in thousands, except lease term and discount rate):


	Three Months Ended
	March 31,
	2026			2025
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Finance Leases	$	54		$	71
Operating Cash Flows from Operating Leases	$	403		$	638
Financing Cash Flows from Finance Leases	$	214		$	300

Non-Cash Additions to Right-of-Use Assets and Lease Liabilities:
Recognition of Right-of-Use Assets for Finance Leases	$	—		$	48
Recognition of Right-of-Use Assets for Operating Leases	$	531		$	—

Weighted-Average Remaining Lease Term (Years) - Finance Leases	2			3
Weighted-Average Remaining Lease Term (Years) - Operating Leases	4			6
Weighted-Average Discount Rate - Finance Leases	11.70		%	12.01		%
Weighted-Average Discount Rate - Operating Leases	13.10		%	11.57		%

Future minimum lease payments under non-cancelable finance and operating leases as of March 31, 2026 for each of the following years were as follows (in thousands):


	Operating Leases				Finance Leases
	Third Parties		Related Parties		Third Parties		Total
2026 (Remaining)	$	1,244	$	70	$	743	$	2,057
2027	1,382		93		825		2,300
2028	762		93		332		1,187
2029	580		93		32		705
2030	548		93		—		641
Thereafter	509		—		—		509
Total Future Minimum Lease Payments	5,025		442		1,932		7,399
Less: Imputed Interest	(1,108)		(123)		(224)		(1,455)
Present Value of Lease Liability	3,917		319		1,708		5,944
Less: Current Portion of Lease Liability	(1,253)		(50)		(799)		(2,102)
Present Value of Lease Liability, Net of Current Portion	$	2,664	$	269	$	909	$	3,842

As of March 31, 2026, the Company leases certain business facilities from certain related parties and third parties under non-cancellable operating lease agreements that specify minimum rentals. The lease terms included in the determination of the operating lease liabilities and future minimum rental payments reflect only the non-cancellable period of the leases and exclude periods covered by options to extend for which the Company is not reasonably certain it will exercise such options. These non-cancellable operating leases require monthly payments ranging from $800 to $25 thousand and expire through November 2032. Certain lease monthly payments related to non-cancellable operating leases may escalate up to 4.0% each year. In such cases, the variability in lease payments is included within the current and noncurrent operating lease liabilities.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

11. NOTES PAYABLE AND CONVERTIBLE DEBENTURES

Notes payable consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Senior Secured Credit Facility	$	50,000	$	50,000

Convertible Debentures	14,735		16,006
2025 Lompoc Term Loan	2,980		2,990
Greenhouse 2 Equipment Supplier Financing	1,120		—

Total Notes Payable	68,835		68,996
Less: Unamortized Debt Issuance Costs and Loan Origination Fees	(978)		(330)
Net Amount	67,857		68,666
Less: Current Portion of Notes Payable	(38)		(37)
Notes Payable, Net of Current Portion	$	67,819	$	68,629

Senior Secured Credit Facility

On February 28, 2025, the Company refinanced its Prior Credit Agreement (as defined below) and entered into a new senior secured credit facility for an aggregate principal amount of $50 million maturing on February 28, 2030 (the “Senior Secured Credit Facility,” as amended) with certain U.S.-based commercial banks (together, the “Senior Secured Credit Facility Lender”). The Senior Secured Credit Facility is secured by a first priority lien on the Company’s Camarillo, Padaro and Casitas greenhouse farms and facilities and a first priority lien on the rest of the Company’s assets excluding other real estate and is jointly and severally guaranteed by several of the Company’s subsidiaries.

Payments for the first 2 years are interest-only. Principal and interest payments will be made during the last 3 years based on a straight-line amortization of the loan amount over a period of 15 years beginning on April 1, 2027, with a balloon payment of the remainder of the principal due on the maturity date. Interest payments began on April 1, 2025 and will be paid in monthly installments. The Senior Secured Credit Facility has optional and mandatory prepayments. The Company may make optional prepayments to repay the Senior Secured Credit Facility, in whole or in part, subject to paying an applicable premium. Mandatory prepayments include a change in control of the borrower subsidiaries including changes in parent company ownership or certain acquisition or controlling influence over the borrower subsidiaries.

The Senior Secured Credit Facility has a floating interest rate based on the Wall Street Journal’s prime rate, which was 6.75% as of March 31, 2026, plus 1.25%. On February 28, 2025, the Company entered into an interest rate swap agreement with a notional amount of $50 million to convert the variability of cash flows resulting from fluctuations in variable rates to effectively set the interest rate at 8.58%. The interest rate swap agreement expires on February 28, 2030. See Note 12 – Derivative Instruments for more information.

Upon closing, the Company deposited an interest reserve in the amount of $3 million into an escrow account, which is included in restricted cash, net of current portion in the Unaudited Condensed Consolidated Interim Balance Sheet as of March 31, 2026.

The Senior Secured Credit Facility contains a covenant which requires the Company to maintain liquidity in excess of $15 million at all times. The Senior Secured Credit Facility also contains a covenant which requires the Company to maintain a Consolidated Fixed-Charge Coverage Ratio of at least 1.25x measured quarterly on a trailing-twelve-month basis commencing as of December 31, 2024. The Fixed-Charge Coverage Ratio is defined as Adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) minus income tax expense divided by the current portion of long-term debt plus interest expense plus the current portion of capital leases. Preferred equity dividend payments and convertible debt payments are not included in the Fixed-Charge Coverage Ratio calculation as the former can be suspended if needed and the latter can be paid in shares.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

As of December 31, 2025, the Company was not in compliance with the Fixed-Charge Coverage Ratio financial covenant under its Senior Secured Credit Facility and also experienced certain technical events of default related to administrative and guarantor provisions, none of which related to payment obligations. As a result of these events of default, the lender had the contractual right to declare the related debt immediately due and payable. On March 16, 2026, the Company entered into a First Amendment and Waiver to the Senior Secured Credit Facility pursuant to which the lender waived the financial covenant violation and the related technical events of default. The amendment also suspends testing of the Fixed-Charge Coverage Ratio for the fiscal quarters ending March 31, 2026, June 30, 2026, and September 30, 2026, with covenant testing resuming for the fiscal quarter ending December 31, 2026. As a result of the waiver and covenant suspension, the lender does not have the contractual right to accelerate the debt arising from these events of default for a period greater than twelve months from December 31, 2025. Accordingly, the related debt has been classified as noncurrent as of March 31, 2026 and December 31, 2025.

Prior Senior Secured Credit Agreement

On December 9, 2021 (the “Prior Senior Secured Closing Date”), the Company entered into a senior secured term loan agreement (the “Prior Credit Agreement,” as amended), for total available proceeds of up to $100 million with funds managed by a U.S.-based private credit investment fund and other participating third-party lenders (together, the “Prior Senior Secured Lender”). Effective December 10, 2021, the Company closed on an initial term loan through the Prior Credit Agreement of $50 million.

On February 28, 2025, the Company used proceeds from the Senior Secured Credit Facility to repay the remaining balance of the Prior Credit Agreement term loan in the amount of $40.6 million plus fees and extinguished in its entirety the Company’s obligations under the Prior Credit Agreement. As a result, the Company recognized $0.3 million as a loss on extinguishment of debt in its Unaudited Condensed Consolidated Interim Statement of Operations.

2025 Lompoc Term Loan

On August 4, 2025, the Company entered into a term loan for an aggregate principal amount of $3 million maturing on August 4, 2035 (the “2025 Lompoc Term Loan”) with a U.S.-based bank (the “2025 Lompoc Term Loan Lender”). The 2025 Lompoc Term Loan requires monthly principal and interest payments commencing on September 4, 2025 and has an initial fixed interest rate of 8.5% for the first five years. Beginning September 4, 2030, the loan converts to a variable rate based on the Wall Street Journal prime rate plus 1%, resetting every five years, with a minimum floor rate of 5%. The loan is amortized over 25 years with a balloon payment due at maturity. Proceeds were used to acquire the remaining 76% ownership interest in a property located in Lompoc, California, on August 18, 2025.

The 2025 Lompoc Term Loan is secured by a first-priority deed of trust on the Company’s Lompoc facility and a first priority lien on other assets of the Company excluding other real estate. The loan is jointly and severally guaranteed by several of the Company’s subsidiaries.

The 2025 Lompoc Term Loan includes covenants including a requirement to maintain a minimum debt service coverage ratio of 1.25x, measured annually at the guarantor level, Glass House Brands Inc. As of December 31, 2025, the Company was not in compliance with this financial covenant. As a result, the lender had the contractual right to declare the related debt immediately due and payable. In March 2026, the lender provided a waiver of the financial covenant violation which prevents the lender from exercising its acceleration rights for a period of at least twelve months from December 31, 2025. Accordingly, the related debt has been classified as noncurrent as of March 31, 2026 and December 31, 2025.

Greenhouse 2 Equipment Supplier Financing

On January 15, 2026, the Company entered into an agreement for the purchase and installation of equipment for Greenhouse 2 with an aggregate purchase price of approximately $4.7 million. The agreement includes a supplier financing arrangement for approximately $4.0 million of the purchase price. The financing bears interest at a rate of 7% and is repayable in ten equal semiannual installments over a five-year period. Payments are expected to commence approximately six months following delivery with the first installment due after installation is complete.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

As of March 31, 2026, the Company has taken delivery of a portion of the equipment and recognized a corresponding financing liability for the delivered portion of approximately $1.1 million. No amounts have been recognized for the remaining equipment, as delivery has not yet occurred. The Company expects the balance of the equipment to be delivered and placed into service during the second quarter of 2026.

Convertible Debentures

On April 28, 2022, the Company completed the Plus Products acquisition in which the purchase price was payable in part through an aggregate of 20,005 unsecured convertible debenture notes which consist of 12,003 debenture notes (the “Series A Notes”) and 8,002 debenture notes (the “Series B Notes”) (collectively, the “Plus Convertible Notes”). The Plus Convertible Notes accrue interest at 8.00% per annum payable semi-annually in arrears until April 15, 2027 (the “Maturity Date”). Interest is payable either in cash, by the issuance of the Company’s Equity Shares, or a combination of both at the sole discretion of the Company, based on the 10-day volume-weighted average price (“VWAP”) of the Equity Shares ending 5 trading days prior to the interest payment date with a fixed exchange rate of USD $1.00 to CAD $1.27.

The Series A Notes are redeemable, at the sole option of the Company, in full or in part on a pro rata basis, and payable either in cash, by the issuance of the Company’s Equity Shares, or a combination of both, at any time through the Maturity Date based on the higher of (i) the 10-day VWAP of the Equity Shares ending 5 trading days prior to the redemption date, or (ii) CAD $4.08.

The Series B Notes are redeemable, at the sole option of the Company, in full or in part on a pro rata basis, and payable either in cash, by the issuance of the Company’s Equity Shares, or a combination of both, at any time through the Maturity Date based on the lower of (i) the 10-day VWAP of the Equity Shares ending 5 trading days prior to the redemption date, or (ii) $10.00 per Equity Share. In the event the Company’s Equity Shares achieve a closing price of $10.00 per share over any period greater than or equal to 20 consecutive trading days, each holder of the Series B Notes may elect to convert all or a portion of their holdings into the Company’s Equity Shares based on a conversion price of $10.00 per Equity Share. As of March 31, 2026, the balance of $11.0 million and $3.8 million for the Series A Notes and Series B Notes, respectively remain outstanding.

As of March 31, 2026, the scheduled maturities of notes payable for each of the following years were as follows (in thousands):


	Principal Payments
2026 (Remaining)	$	27
2027	17,822
2028	3,645
2029	3,650
2030	40,876
Thereafter	2,815
Total Future Minimum Principal Payments	$	68,835

12. DERIVATIVE INSTRUMENTS

Assets or liabilities associated with our derivative instruments are recorded at fair value in other assets and other non-current liabilities on our Unaudited Condensed Consolidated Interim Balance Sheets. Gains and losses resulting from changes in fair value are recognized in (gain) loss on change in fair value of derivative asset and liability on the Unaudited Condensed Consolidated Interim Statements of Operations.

Interest Rate Risk

The Company utilizes an interest rate swap to manage its exposure to variability in future cash flows associated with fluctuations in interest rates on its Senior Secured Credit Facility. This swap effectively converts the variable interest rate on the debt to a fixed rate and is classified as a derivative under ASC 815. The Company has not designated this contract for hedge accounting.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

The Company’s interest rate swap is measured at fair value using Level 2 inputs. The fair value is determined using a discounted cash flow method that incorporates observable inputs. The fair value calculation includes a credit valuation adjustment and forward interest rate curves for the same periods as the future maturity dates of the interest rate swap. As of March 31, 2026 and December 31, 2025 the interest rate swap fair value is in a liability position due to valuation inputs including projected changes in the forward interest rate curve.

Convertible Debenture Derivatives

The conversion features of the Series A Notes and Series B Notes were previously bifurcated from the related notes and classified as derivatives due to the variability of price in accordance with ASC 815. Accordingly, the fair value of the conversion features for the Series A Notes and Series B Notes were measured at fair value using a binomial lattice model that is based on unobservable inputs and were classified as Level 3 fair value measurements in the fair value hierarchy. The Company assessed the conversion and settlement features of the Series A Notes and Series B Notes under ASC 815 and concluded that bifurcation as embedded derivatives is not required.

The following table presents the fair value of the Company’s derivative instruments not designated as hedging instruments (in thousands):


Derivative instrument	Financial Statement Line Item	March 31, 2026		December 31, 2025
Interest Rate Swap	Other Non-Current Liabilities	$	(1,244)	$	(1,653)
Convertible Debenture Conversion Feature	Other Assets	—		466
Total		$	(1,244)	$	(1,187)

The following table presents the change in fair value of the Company’s derivative instruments not designated as hedging instruments, including the initial recognition of fair value for the interest rate swap, as reported on the Unaudited Condensed Consolidated Interim Statements of Operations (in thousands):


		Three Months Ended
		March 31,
Derivative instrument	Financial Statement Line Item	2026		2025
Interest Rate Swap	(Gain) Loss on Change in Fair Value of Derivative Asset and Liability	$	(409)	$	1,489
Convertible Debenture Conversion Feature	(Gain) Loss on Change in Fair Value of Derivative Asset and Liability	—		244
Total		$	(409)	$	1,733

13. SHAREHOLDERS’ EQUITY

As of March 31, 2026 and December 31, 2025, the authorized share capital of the Company was comprised of an unlimited number of (i) Subordinate Voting Shares, (ii) Restricted Voting Shares, (iii) Limited Voting Shares, (iv) Multiple Voting Shares and (v) Preferred Shares.

Multiple Voting Shares

The Company is authorized to issue an unlimited number of Multiple Voting Shares without nominal or par value. Holders of Multiple Voting Shares are entitled to receive notice of any meeting of shareholders of the Company, and to attend, vote and speak at such meetings, except those meetings at which only holders of a specific class of shares are entitled to vote separately as a class under the Business Corporations Act (British Columbia). On all matters upon which holders of Multiple Voting Shares are entitled to vote, each Multiple Voting Share entitles the holder thereof to 50 votes per Multiple Voting Share. Multiple Voting Shares are not entitled to dividends and are not convertible. The Multiple Voting Shares had a three-year sunset period that would have expired on June 29, 2024. At the annual general and special meeting of the shareholders of the Company held on June 23, 2023, shareholders passed a special resolution to amend the Articles of the Company to extend the “sunset” date for the Multiple Voting Shares to June 29, 2027, upon which they will be automatically redeemed for $0.001 per Multiple Voting Share.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Equity Shares

The holders of each class of Equity Shares are entitled to receive notice of, to attend (if applicable, virtually) and to vote at all meetings of shareholders of the Company, except that they are not able to vote (but are entitled to receive notice of, to attend and to speak) at those meetings at which the holders of a specific class are entitled to vote separately as a class under the Business Corporations Act (British Columbia) and except that holders of Limited Voting Shares are not entitled to vote for the election of directors of the Company. The Subordinate Voting Shares and Restricted Voting Shares carry one vote per share on all matters. The Limited Voting Shares carry one vote per share on all matters except the election of directors, as the holders of Limited Voting Shares do not have any entitlement to vote in respect of the election of directors of the Company.

In the case of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Equity Shares are entitled, subject to the prior rights of the holders of any shares of the Company ranking in priority to the Equity Shares (including any liquidation preference on any issued and outstanding Multiple Voting Shares and/or Preferred Shares), to participate ratably in the Company’s remaining property along with all holders of the other classes of Equity Shares (on a per share basis).

Exchangeable Shares of MPB Acquisition Corp.

Exchangeable Shares are part of the authorized share capital of MPB Acquisition Corp. (“MPB”), a wholly-owned subsidiary of the Company, which entitle their holders to rights that are comparable to those rights attached to the Equity Shares. The Exchangeable Shares carry one vote per share, and the aggregate voting power of the Exchangeable Shares must not exceed 49.9% of the total voting power of all classes of shares of MPB. During the three months ended September 30, 2025, MPB amended and restated its Articles of Incorporation to provide for a new series of Exchangeable Shares that have substantially the same rights and obligations of the existing Exchangeable Shares. Until a holder exchanges its Exchangeable Shares for Equity Shares, the holder of such Exchangeable Shares will not have the right to vote at meetings of the shareholders of the Company, though it will have the right to vote at meetings of the shareholders of MPB, including with respect to altering the rights of holders of any of the Exchangeable Shares, or if MPB decides to take certain actions without fully protecting the holders of any of the Exchangeable Shares, or as otherwise required by law. The Exchangeable Shares are exchangeable at any time, on a one-for-one basis, for the Equity Shares at the option of the holder.

The Company treats the Exchangeable Shares as options, each with a value equal to an Equity Share, which represents the holder’s claim on the equity of the Company. Pursuant to the terms of the Exchangeable Shares, the Company and MPB are required to maintain the economic equivalency of such Exchangeable Shares with the publicly traded Equity Shares of the Company. This means the Exchangeable Shares are required to share the same economic benefits and retain the same proportionate ownership in the assets of the Company as the holders of the Equity Shares. The Company has presented these Exchangeable Shares as a part of shareholders’ equity within these Consolidated Financial Statements due to (i) the fact that they are economically equivalent to the Equity Shares, and (ii) the holders of the Exchangeable Shares are subject to restrictions on transfer under U.S. securities laws but may dispose of the Exchangeable Shares without such restriction by exchanging them for Equity Shares. Changes in these assumptions would affect the presentation of the Exchangeable Shares from shareholders’ equity to non-controlling interests; however, there would be no impact on earnings per share.

Preferred Shares of GH Group, Inc.

The authorized total number of preferred shares (the “GH Group Preferred Shares”) of GH Group, Inc. (“GH Group”) is 200,000 of which 55,000 shares are designated as shares of Series B Preferred Stock (“Series B Preferred”), 5,000 shares are designated as shares of Series C Preferred Stock (“Series C Preferred”), 15,000 shares are designated as shares of Series D Preferred Stock (“Series D Preferred”) and 80,000 shares are designated as shares of Series E Convertible Preferred Stock (“Series E Convertible Preferred”). The Series B Preferred and Series C Preferred were fully redeemed or converted and are no longer issued and outstanding.

Holders of GH Group Preferred Shares are not entitled to vote, except in connection with any changes to the Certificate of Incorporation or the Bylaws of GH Group that adversely affect the powers, preferences, privileges or rights of such GH Group Preferred Shares. Except as provided in the foregoing sentence, the Series B, Series C and Series D Preferred do not carry any voting rights and are not convertible. Except as provided above, the Series E Convertible Preferred do not carry any voting rights, except for limited protective provisions, and are convertible.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

In the event of a liquidation, voluntary or involuntary, dissolution or winding-up of GH Group, the holders of outstanding GH Group Preferred Shares are entitled to be paid out of the assets of GH Group available for distribution to its stockholders, in the following order of priority and before any payment shall be made to the holders of GH Group Common Stock: (i) Series B Preferred, (ii) Series C Preferred, (iii) Series D Preferred and (iv) Series E Convertible Preferred. GH Group may redeem the GH Group Preferred Shares from a holder, in whole or in part, only after certain trigger events described below have occurred, and the redemption price will equal the liquidation value plus any accrued, unpaid and accumulated dividends.

The Series E Convertible Preferred are convertible at any time at the option of the holder into GH Group Class B Common Stock at a fixed conversion price of $9.00 per share. Each GH Group Class B Common Share is exchangeable for one Class C Common Share of MPB Acquisition Corp., which in turn is exchangeable for one publicly traded Subordinate Voting Share of Glass House Brands Inc. (the “Equity Shares”), resulting in an effective one-for-one exchange. GH Group may redeem the Series E Convertible Preferred, in whole or in part, at any time until the fifth anniversary of the original issuance after the earlier of the following trigger events have occurred: (a) (i) the 60-day volume-weighted average price of the Equity Shares is at least $12.00; (ii) the average daily trading volume of the Equity Shares exceeds one million shares; and (iii) the Equity Shares are listed on a major United States stock exchange, or (b) certain change of control events. Upon redemption, holders will receive the liquidation value plus any accrued, unpaid and accumulated dividends.

The Series B Preferred and the Series C Preferred carried a 20% cumulative dividend rate, which increased by 2.5% annually after the second anniversary and until the 54-month anniversary of the initial issuance. The Series D Preferred carry a 15% cumulative dividend rate, which increases by 5% following the fifth anniversary of the original issuance. The Series E Convertible Preferred carry a 12% cumulative dividend rate. Dividends accrue in arrears annually and are payable in cash quarterly if and when declared by GH Group’s board of directors.

There were 15,000 shares of Series D Preferred issued and outstanding as of March 31, 2026 and December 31, 2025; and there were 77,500 shares of Series E Convertible Preferred issued and outstanding as of March 31, 2026 and December 31, 2025. In accordance with the provisions above, the Company recorded dividends to the holders of GH Group Preferred Shares in the amount of $2.9 million and $4.6 million for the three months ended March 31, 2026 and 2025, respectively.

At-The-Market Program

The Company commenced an at-the-market distribution program (the “ATM Program”) in December 2024 by means of a prospectus supplement dated December 2, 2024 (the “Prospectus Supplement’) to its short form base shelf prospectus dated May 16, 2024 (the “Shelf Prospectus”) with the securities regulatory authorities in all provinces and territories of Canada in connection with the ATM program. The ATM Program is subject to and governed by the terms of an equity distribution agreement dated November 13, 2024 (the “Equity Distribution Agreement”) with ATB Securities Inc. and Canaccord Genuity Corp., pursuant to which, the Company may from time to time sell up to $25 million of its Subordinate Voting Shares, Restricted Voting Shares and Limited Voting Shares (collectively, the “Equity Shares”) under the ATM Program.

Share and Equity Transactions

During the three months ended March 31, 2026, the Company issued 2,086,737 Equity Shares under the ATM Program at an average price of $8.98 per share for gross proceeds of $18.7 million. The Company received net proceeds of $18.4 million after paying commissions of $0.4 million to the sales agent for the ATM Program. The share issuance costs have been presented net within additional paid-in capital.

Non-Controlling Interests

On August 8, 2025, the Company entered into agreements with the minority members of SBDANK, LLC (“SBDANK”), pursuant to which the Company acquired the remaining 49% noncontrolling interest in SBDANK. The agreements resulted in the Company obtaining 100% ownership of SBDANK. As consideration for the acquisition, the Company issued 248,829 Equity Shares to the former minority members of SBDANK.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

The value of the equity issuances issued to non-controlling interest members were determined using the estimated fair value of the Equity Shares.

The Company recorded income attributable to a non-controlling interest during the three months ended March 31, 2026 and 2025 of $126 thousand and $52 thousand, respectively.

Variable Interest Entity

The table below summarizes information for entities that primarily hold real estate assets used in the Company’s operations. The Company has concluded these entities to be VIEs as the Company possesses the power to direct activities through various agreements. Through these agreements, the Company can significantly impact the VIE and thus holds a controlling financial interest. This information represents amounts before intercompany eliminations.

The aggregate balances of VIEs included in the accompanying Unaudited Condensed Consolidated Interim Balance Sheets and Unaudited Condensed Consolidated Interim Statements of Operations were as follows below as of and for the three months ended March 31, 2026 (in thousands):


	March 31, 2026
Current Assets	$	863
Non-Current Assets	7,217
Total Assets	$	8,080

Current Liabilities	$	—
Non-Current Liabilities	—
Total Liabilities	$	—

Revenues, Net	$	168
Net Income Attributable to Non-Controlling Interest	$	126

14. SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLAN

The Company has an amended and restated equity incentive plan (the “Incentive Plan”) under which the Company may issue various types of equity instruments or instruments that track to equity, more particularly the Equity Shares, to employees, officers, consultants and non-employee directors. The types of equity instruments issuable under the Incentive Plan encompass, among other things, stock options, unrestricted stock bonus and restricted stock units (together, the “Awards”). The Awards are expensed and recorded as a component of general and administrative costs. The maximum number of the Awards that may be issued under the Incentive Plan is 10% of the fully-diluted Equity Shares of the Company (inclusive of the Equity Shares issuable in exchange for unrestricted Exchangeable Shares) as calculated using the treasury method. During the Company’s annual and special meeting of the shareholders held on June 20, 2025, disinterested shareholders approved a second amended and restated equity incentive plan (the “Second Amended Incentive Plan”) for purposes of instituting a one-time fixed increase to the rolling 10% share reserve to give effect to the number of shares issuable under the market-based restricted stock units as discussed below.

The Second Amended Incentive Plan is an “evergreen” plan, meaning that if an Award expires, becomes un-exercisable, or is cancelled, forfeited or otherwise terminated without having been exercised or settled in full, as the case may be, the Equity Shares allocable to the unexercised portion of an Award shall again become available for future grant or sale under the Second Amended Incentive Plan (unless the Second Amended Incentive Plan has terminated by its terms), and the number of the Awards available for grant will increase as the number of issued and outstanding Equity Shares increases. Granting and vesting of the Awards are determined by and recommended to the Board for approval by the Compensation, Nomination and Corporate Governance Committee of the Board of Directors. The exercise price for options (if applicable) will generally not be less than the fair market value of the Award at the time of grant and will generally expire after 5 years.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Stock Options

A reconciliation of the beginning and ending balance of stock options outstanding was as follows:


	Number of Stock Options	Weighted-Average Exercise Price
Outstanding as of December 31, 2025	179,327	$	3.10
Exercised and Forfeited	(157,256)	3.12
Outstanding as of March 31, 2026	22,071	3.08

As of March 31, 2026 and December 31, 2025, options vested and exercisable were 22,071 and 179,327, respectively. As of March 31, 2026, options outstanding had a weighted-average remaining contractual life of 0.25 years.

Restricted Stock Units

A reconciliation of the beginning and ending balance of restricted stock units outstanding was as follows:


			Number of Restricted Stock Units
Unvested as of December 31, 2025			5,326,867
Granted			27,811
Vested			(598,402)

Unvested as of March 31, 2026			4,756,276

During the three months ended March 31, 2026 and 2025, the Company recognized $3.7 million and $2.1 million, respectively, in stock-based compensation related to restricted stock units and was included as a component of general and administrative expense in the Unaudited Condensed Consolidated Interim Statements of Operations. The fair value of the restricted stock units granted was determined using the value of the Equity Shares at the date of grant.

Market-Based Performance Restricted Stock Units

The Company’s market-based performance restricted stock units vest contingent upon the achievement of pre-determined market and service conditions. If market conditions are not met but service conditions are met, the market-based performance restricted stock units will not vest; however, any compensation expense that was recognized to date will not be reversed. The Company amortizes the fair value of market-based performance restricted stock units over the requisite service period and recognizes compensation cost on a straight-line basis over the service period. The number of Equity Shares, if any, to be issued for these awards is determined based on the achievement of specific share price targets during the performance period, as measured by the volume weighted average price over the 90 trading days ending on the last day of a fiscal quarter. The time-based vesting occurs on the third anniversary of the grant date and requires the participant to remain in the eligible service of the Company through that time. Awards that vest prior to the fourth anniversary of the grant date will settle out 50% on the fourth anniversary of the grant date, and 50% on the fifth anniversary of the grant date. Any additional awards that vest between the fourth and fifth anniversary of the grant date will settle 100% on the fifth anniversary of the grant date.

The fair value of the market-based restricted performance stock units is determined using the Monte-Carlo simulation.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

There were no market-based restricted performance stock units granted during the three months ended March 31, 2026. As of March 31, 2026, a maximum number of 3,000,000 granted and unvested market-based restricted performance stock units could potentially vest.

During the three months ended March 31, 2026, the Company recognized $0.5 million in stock-based compensation related to market-based performance restricted stock units and was included as a component of general and administrative expense in the Unaudited Condensed Consolidated Interim Statements of Operations.

Team Member Shareholder Participation Program

In December 2025, the Company’s Board of Directors approved the Team Member Shareholder Participation Program (the “TMSPP”) under the Company’s existing equity incentive plan. Eligible employees may receive unrestricted Equity Shares as consideration for services rendered. Under the terms of the TMSPP, eligible participating employees earn an annual award equal to approximately 5% of their gross base compensation for the applicable year. The number of Equity Shares issued is determined in the subsequent year based on the value of the award divided by a VWAP of the Company’s Equity Shares over a specified period prior to the issuance date.

As the awards are based on a fixed monetary value that is settled in a variable number of Equity Shares, the awards are classified as liability awards until settlement. Stock-based compensation expense is recognized over the requisite service period, which represents the period in which employees earn the award and satisfy the service condition. The liability is remeasured at each reporting date until settlement, with changes in value recognized in stock-based compensation expense. Upon issuance of shares, the liability is reclassified to equity.

During the three months ended March 31, 2026 and 2025, the Company recognized $0.3 million and nil, respectively, in stock-based compensation related to the TMSPP and was included as a component of general and administrative expense in the Unaudited Condensed Consolidated Interim Statements of Operations.

As of March 31, 2026, the Company recorded a liability of approximately $0.3 million related to the TMSPP, which is included in accounts payable and accrued liabilities in the Unaudited Condensed Consolidated Interim Balance Sheet.

Stock Appreciation Right Units

The Company has authorized and issued certain stock appreciation rights (“SARs”) which are issued to various employees of the Company. SARs vested 33% one year after the grant date and the remaining 67% vested monthly over two years. Vested and exercised SARs will receive cash in the amount of SARs exercised multiplied by the excess of the fair market value of an Equity Share as of the exercise date over the stated strike price of the SAR. As SARs are cash-settled, the Company recognizes the value of SARs as liabilities which are included in accounts payable and accrued liabilities in the Unaudited Condensed Consolidated Interim Balance Sheets. As of March 31, 2026 and December 31, 2025, the Company recorded a liability of nil and $17 thousand, respectively.

A reconciliation of the beginning and ending balance of the SARs outstanding was as follows:


			Number of Stock Appreciation Rights Units
Outstanding as of December 31, 2025			2,922
Exercised			(974)
Forfeited			(1,948)
Outstanding as of March 31, 2026			0

During the three months ended March 31, 2026 and 2025, the Company recognized $(5) thousand and $(37) thousand, respectively, of expense related to the SARs.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Warrants

A reconciliation of the beginning and ending balance of warrants outstanding was as follows:


	Number of Warrants	Weighted-Average Exercise Price
Outstanding as of December 31, 2025	43,221,659	$	9.68
Exercised	(380,000)	5.00

Outstanding as of March 31, 2026	42,841,659	9.72

The following table summarizes the warrants that remained outstanding as of March 31, 2026:


Security Issuable	Exercise Price		Expiration Date	Warrants Outstanding	Warrants Exercisable
Equity Shares	$	11.50	June 2026	30,664,500	30,664,500
Equity Shares	5.00		August 2027	9,407,159	9,407,159
Equity Shares	6.00		August 2028	2,770,000	2,770,000
				42,841,659	42,841,659

As of March 31, 2026, warrants outstanding had a weighted-average remaining contractual life of 0.65 years.

Subsequent to March 31, 2026, the Company announced that it has delivered a notice of redemption, dated April 28, 2026, with respect to warrants outstanding under the Warrant Agency Agreement (as defined below). See to Note 20 – Subsequent Events for further discussion.

Defined Contribution Plan

The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code for eligible employees. Beginning in fiscal year 2025, the Company began matching employee contributions to the plan at a specified percentage of employee contributions.

Employer matching contributions are recognized as compensation expense in the period in which the contributions are made. During the three months ended March 31, 2026 and 2025, the Company recognized $66 thousand and nil, respectively, of expense related to employer contributions under the plan.

15. LOSS PER SHARE

The following is a reconciliation for the calculation of basic and diluted loss per share (in thousands, except share and per share data):


	Three Months Ended
	March 31,
	2026		2025
Net Loss Attributable to the Company	$	(17,132)	$	(10,060)
Less: Dividends and Increase in Redemption Values of GH Group Preferred Shares	(2,888)		(4,577)

Adjusted Net Loss Attributable to the Company	$	(20,020)	$	(14,637)

Weighted-Average Shares Outstanding - Basic	87,122,436		81,144,495

Weighted-Average Shares Outstanding - Diluted	87,122,436		81,144,495

Loss Per Share - Basic	$	(0.23)	$	(0.18)
Loss Per Share - Diluted	$	(0.23)	$	(0.18)

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

For the three months ended March 31, 2026 and 2025, diluted loss per share was the same as basic loss per share as the potential issuance of shares related to stock-based award plans, warrants, contingent shares, convertible preferred shares and convertible debentures were anti-dilutive.

The following common equivalent shares were excluded from the loss per share - diluted calculation because their inclusion would have been anti-dilutive:


	For the Three Month Loss Per Share
	As of March 31,
	2026	2025
Stock Award Plans	7,811,752	7,267,045
Warrants	42,841,659	44,384,041

Convertible Preferred Shares	77,500	—
Convertible Debentures	2,049,969	3,373,253
Total	52,780,880	55,024,339

Net loss attributable to the Company is adjusted for dividends and various other adjustments as defined in ASC 260, Earnings Per Share. After adjustments as defined in ASC 260, if the Company is in a net loss position, diluted loss per share is the same as basic loss per share when the potential issuance of shares related to stock-based award plans, warrants, contingent shares, convertible preferred shares and convertible debentures are antidilutive. After adjustments, as defined in ASC 260, if the Company is in a net income position, diluted earnings per share includes shares related to stock-based award plans, warrants, contingent shares, convertible preferred shares and convertible debentures that are determined to be dilutive using the treasury stock method for all equity instruments issuable in equity units and the “if converted” method for the Company’s convertible preferred shares and convertible debentures.

16. PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES

Provision for income taxes consisted of the following (in thousands):


	Three Months Ended
	March 31,
	2026		2025
Current:
Federal	$	3,032	$	2,902
State	26		26
Total Current	3,058		2,928

Deferred:
Federal	—		—
State	—		—
Total Deferred	—		—
Total Provision for Income Taxes	$	3,058	$	2,928

The Company has used a discrete effective tax rate method to calculate taxes for the three months ended March 31, 2026 and 2025. The Company determined that since small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the fiscal three-month periods ended March 31, 2026 and 2025.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

As the Company operates in the legalized cannabis industry, it is subject to the limits of Internal Revenue Code (“IRC”) Section 280E (“Section 280E”) for U.S. federal income tax purposes under which the Company is only allowed to deduct certain expenses directly related to the cost of goods sold. This results in permanent differences between ordinary and necessary business expenses deemed nonallowable under Section 280E, whereas the Company deducts all operating expenses on its state tax returns for which there is no comparable provision of Section 280E under the California Revenue and Taxation Code.

Based on legal interpretation, it is the Company’s position that it does not owe taxes attributable to the application of Section 280E. Additionally, the Company has determined that the tax impact of its corporate overhead allocation was less likely than not to be sustained on the merits as required under ASC 740, Income Taxes, due to the evolving interpretations of Section 280E. The Company included in the balance of total unrecognized tax benefits as of March 31, 2026 and December 31, 2025 a potential benefit of $34.8 million and $31.7 million, respectfully, that if recognized, would impact the effective tax rate on income from operations related to its tax positions based on legal interpretations that challenge the Company’s tax liability under Section 280E. Unrecognized tax benefits that reduce a net operating loss, similar to tax loss or tax credit carryforwards, are presented as a reduction to deferred income taxes.

The Company’s evaluation of tax positions was performed for those tax years which remain open to for audit. The Company may, from time to time, be assessed interest or penalties by the taxing authorities, although any such assessments historically have been minimal and immaterial to the Company’s financial results. In the event the Company is assessed for interest and/or penalties, such amounts will be classified as income tax expense in the financial statements.

As of March 31, 2026, the Company’s federal tax returns since 2020 and state tax returns since 2019 are still subject to adjustment upon audit. The 2019 federal tax return of Natural Healing Center LLC (pre-acquisition) is currently under IRS examination. No other tax returns are currently being examined by any taxing authorities. While it is reasonably possible that certain portions of the unrecognized tax benefit may change from a lapse in applicable statute of limitations, it is not possible to reasonably estimate the effect of any amount of such a change to previously recorded uncertain tax positions in the next 12 months.

On April 23, 2026, the U.S. Department of Justice and the Drug Enforcement Administration issued an order placing FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III. See to Note 20 – Subsequent Events for further discussion.

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”) (Public Law 119-21), a comprehensive tax reform and spending reconciliation bill. The legislation includes several significant business-tax provisions, notably affecting Sections 163(j), 168(k) (Bonus Depreciation), 179, and 174 of the Internal Revenue Code. The provisions most beneficial to the Company relate to the limitation on business interest expense under Section 163(j) and Bonus Depreciation for qualified property.

The OBBBA restores the more generous interest deduction limitation under Section 163(j) that had applied from 2018 through 2021. Under this amendment, the limitation is permanently based on EBITDA, rather than earnings before interest and taxes (“EBIT”). Beginning with tax years starting after December 31, 2024, taxpayers may again add back depreciation and amortization in computing adjusted taxable income for purposes of Section 163(j).

Additionally, for taxable years beginning after December 31, 2025, the OBBBA clarifies that any capitalized interest, other than amounts capitalized under Sections 263(g) and 263A(f), is treated as interest subject to the Section 163(j) limitation.

The OBBBA also revives and permanently extends 100% bonus depreciation under Section 168(k) for qualified property acquired and placed in service on or after January 20, 2025. Qualified property generally includes tangible personal property with a recovery period of 20 years or less and qualified improvement property (“QIP”). Property is treated as acquired when a written binding contract is entered into to acquire the property. Property placed in service prior to January 20, 2025 remains eligible for 40% bonus depreciation.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

The Company has incorporated the applicable income-tax effects of OBBBA in its income tax provision for the three months ended March 31, 2026 and for the year ended December 31, 2025. The impact primarily reflects the reinstatement of the EBITDA-based limitation under Section 163(j), which increased the amount of deductible interest expense for the period. The Company also updated its deferred tax balances to reflect the enacted changes under OBBBA.

Management will continue to monitor the implementation of the OBBBA and evaluate any additional impacts on the Company’s deferred tax balances and effective tax rate.

17. COMMITMENTS AND CONTINGENCIES

Contingencies

The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of these regulations could result in fines, restrictions on its operations, or revocation, cancellation, non-renewal or other losses of permits, licenses and entitlements that could result in the Company ceasing operations. While management of the Company believes that the Company was in compliance with applicable local and state statutes, regulations, and ordinances as of March 31, 2026 and December 31, 2025, cannabis laws and regulations continue to evolve and are subject to differing interpretations. Further, cannabis remains a Schedule I controlled substance and is illegal under U.S. federal law, which may result in federal enforcement actions. As a result, the Company may be subject to regulatory fines, penalties, restrictions or the risk of asset seizure in the future.

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of March 31, 2026 and December 31, 2025, there were no proceedings in which any of the Company’s directors, officers or affiliates were an adverse party to the Company or had a material interest adverse to the Company’s interest.

Element 7 Transaction and Litigation

On November 4, 2021, GH Group filed a lawsuit in the Superior Court for the County of Los Angeles, Central District (Case No. 21STCV40401) against Element 7 CA, LLC (“E7”) and its principals and owners Josh Black and Robert “Bobby” DiVito (together, “Element 7”) for a variety of claims, including fraud and breach of contract and demanded performance under the E7 Agreements. Through the process of litigation, on September 19, 2023, E7, APB and GH Group entered into a Settlement and General Mutual Release Agreement (the “Element 7 Settlement”), where E7 agreed to pay GH Group $2.9 million to settle the Element 7 Proceeding; provided, that if E7 paid GH Group $1.9 million by December 15, 2023, then E7 would have been entitled to a credit of $1.0 million towards the $2.9 million payment. In addition, E7 would retain ownership of its cannabis retail licenses.

E7 failed to pay GH Group $1.9 million by December 15, 2023, and it also failed to subsequently pay GH Group the $2.9 million that was due under the Element 7 Settlement.

On March 6, 2024, the Superior Court of Los Angeles entered into a Final Judgment and Order against E7 for the amount of $2.9 million in favor of GH Group.

On November 19, 2024, C and H Holdings (“C and H”) filed a breach of contract claim among other claims against E7 and other E7 related entities (“C and H Lawsuit”). In addition, C and H requested that the court appoint a receiver for E7 so that the assets could be used to satisfy C and H’s claims under its loan agreement with E7 and the related E7 entities that were included in the lawsuit. C and H also named GH Group in the lawsuit to prevent GH Group from satisfying its judgment against E7.

GH Group opposed the C and H Lawsuit. On April 30, 2025, the court dismissed the lawsuit against GH Group.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

On October 30, 2025, GH Group assigned its judgment against Element 7 to NUG Inc. (“NUG”) in exchange for a firm commitment buying agreement whereby NUG agreed to purchase from GH Group a certain amount of its CPG products until such time as NUG purchased either (x) net revenue in excess of $7.2 million or (y) realized net profits in excess of $1.4 million. For purposes of calculating such amounts, NUG shall receive credit for all qualifying purchases made by NUG on or after November 1, 2024.

Catalyst Litigation

The Company was the plaintiff in litigation in the Central District Superior Court of the County of Los Angeles against Elliot Lewis (“Lewis”), Damian Martin (“Martin”), South Cord Holdings LLC (“SCH”), and South Cord Management LLC (“SCM”) (collectively, “Catalyst Defendants”) following various public, false, and defamatory statements made by Lewis and Martin, co-founders of SCM and SCH, that the Company is the “largest black marketeer” of cannabis in the history of the United States, only 25% of the Company’s cultivated cannabis is sold through legal channels, and therefore 70% to 80% is sold illegally, and that the Company is engaging in illicit conduct to avoid taxes.

The Company is the defendant in litigation in the Central District Superior Court of the County of Los Angeles filed by 562 Discount Med, Inc. (“Discount Med” doing business as Catalyst Cannabis Co.), an affiliate of SCH and SCM. Discount Med has asserted claims against the Company for violation of California Business & Professions Code Section 17200 et seq., California’s Unfair Competition Law. Discount Med similarly alleged, like the Catalyst Defendants, that the Company is the “largest black marketeer” of cannabis in the United States and has purposefully structured its business to profit from the illicit market. The Company has categorically denied all such allegations and asserted affirmative defenses.

On May 20, 2024, the Company voluntarily dismissed without prejudice the defamation lawsuit against the Catalyst Defendants.

On June 25, 2024, the Superior Court of California (Los Angeles County) dismissed the lawsuit filed by Discount Med against the Company for unfair competition. The Court granted Glass House’s motion for judgment on the pleadings with prejudice. On July 15, 2024, the Court entered a judgment in Glass House’s favor, awarding costs against the plaintiff and concluding the case.

On August 7, 2024, Discount Med filed a Notice of Appeal of the judgment of dismissal following an order granting a motion for judgment on the pleadings without leave to amend. On February 9, 2026, Discount Med voluntarily filed a request for dismissal as to the Company, which the Court granted on February 10, 2026. The matter was remitted to the state court for entry of a judgment.

18. RELATED PARTY TRANSACTIONS

Leases

Neo Street Partners LLC, a company partially owned by an executive and board member of the Company, entered into a five-year lease with a subsidiary of the Company. The lease, which commenced in October 2018, provided for an initial annual base rent payment of $213 thousand, increasing to $243 thousand for years two to five. The lease was renewed for one year starting in October 2024. Rent expense for the three months ended March 31, 2026 and 2025 was nil and $93 thousand, respectively. On August 18, 2025, the Company acquired the remaining 76% undivided ownership interest in the property located in Lompoc, California. This acquisition eliminates future related party rent expense associated with this property.

3645 Long Beach LLC, a company partially owned by an executive and board member of the Company, entered into a five-year lease with a subsidiary of the Company. The lease, which commenced in December 2019, was renewed for five years starting on January 1, 2025. It provides for a base rent of $93 thousand, increasing annually by the greater of three percent or the CPI, capped at five percent. Rent expense for the three months ended March 31, 2026 and 2025 was $37 thousand and $20 thousand, respectively.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Isla Vista GHG LLC, a company partially owned by executives and board members of the Company, entered into a ten-year lease with a subsidiary of the Company. The lease, which commenced on the first calendar day after the Company publicly announced the opening of a retail cannabis location at the leased property (the “Commencement Date”), provides for an initial monthly rent of $5 thousand starting April 19, 2022 until the Commencement Date. Effective on the Commencement Date, the initial annual base rent payment is $144 thousand and increasing three percent per annum thereafter. Related party rent expense for the three months ended March 31, 2026 and 2025 was $39 thousand and $36 thousand, respectively.

In August 2022, the Kazan Trust dated December 10, 2004, a trust of which the trustee is an executive and board member of the Company, acquired partial ownership of a real estate entity that entered into a ten-year lease with a subsidiary of the Company. The lease, which commenced in July 2022, provides for an initial annual base rent payment of $36 thousand to the Kazan Trust, increasing three percent per annum thereafter. Rent expense for the three months ended March 31, 2026 and 2025 was $10 thousand and $9 thousand, respectively.

2000 De La Vina LLC, a company partially owned by executives and board members of the Company, entered into two leases with subsidiaries of the Company. Both leases commenced in July 2022 and have ten-year terms. The first lease provides for initial annual base rent of $60 thousand, increasing three percent annually thereafter, and the second lease provides for initial annual base rent of $180 thousand, increasing three percent annually thereafter. The first lease terminated in 2025 in connection with the sale of the underlying property. Subsequent to the termination of the lease during 2025, the Company entered into an agreement to settle its remaining lease obligations through a negotiated termination payment. Rent expense for the three months ended March 31, 2026 and 2025 was $49 thousand and $60 thousand, respectively. Termination payments for the three months ended March 31, 2026 was $27 thousand.

5042 Real Estate Investment, LLC, a company partially owned by an executive and board member of the Company, owns an undivided tenancy-in-common interest in a property leased to a subsidiary of the Company. The lease, which commenced in August 2022 and has a ten-year term, provides for an initial annual base rent payment of $222 thousand to 5042 Real Estate Investment, LLC, increasing three percent per annum thereafter. Rent expense for the three months ended March 31, 2026 and 2025 was $61 thousand and $55 thousand, respectively.

Consulting Agreement

Beach Front Property Management Inc., a company that is majority-owned by an executive and certain board members of the Company, entered into a consulting agreement with the Company dated September 28, 2020. The monthly consulting fee is $11 thousand for mergers and acquisitions advisory and assistance and real estate acquisition and financing services. The agreement may be terminated by either party for any/or no reason without penalty upon seven days written notice. Consulting fees for the three months ended March 31, 2026 and 2025 were $53 thousand and $35 thousand, respectively.

Jon A. Neu Insurance

Jon A. Neu Insurance, an entity majority owned by Beach Front Properties LLC, provides insurance brokerage services to the Company. During the three months ended March 31, 2026 and 2025, the Company recognized insurance brokerage expense relating to services provided by Jon A. Neu Insurance of approximately $82 thousand and $150 thousand, respectively.

Preferred Mezzanine Equity Transactions

Certain executive officers and directors of the Company hold preferred equity interests in GH Group, Inc., a consolidated subsidiary of the Company. During the three months ended March 31, 2026 and 2025, related-party holders received preferred dividends totaling approximately $0.5 million and $0.3 million, respectively, which were paid on a pro rata basis in accordance with the contractual terms applicable to all preferred stockholders. All preferred share issuances, conversions, redemptions, and dividend payments involving related-party holders were completed on the same terms and conditions as those applicable to non-related-party preferred stockholders. No preferential rights or special arrangements were provided to related-party holders.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

19. SEGMENT INFORMATION

During the three months ended March 31, 2026, the Company updated the measure of segment income (loss) reviewed by the Company’s CODM to include an allocation of certain corporate expenses to the Company’s reportable segments. This update reflects changes in the internal financial information regularly reviewed by the CODM for purposes of evaluating segment performance and allocating resources. Accordingly, prior period segment information has been recast to conform to the current period presentation.

Operations by reportable segment for the three months ended March 31, 2026 were as follows (in thousands):


	Three Months Ended March 31, 2026
	Retail		Wholesale Biomass		CPG		Corporate and Other		Total
Revenues, Net	$	11,905	$	23,973	$	4,637	$	—	$	40,515
Cost of Goods Sold	5,940		21,371		3,188		—		30,499
Gross Profit	5,965		2,602		1,449		—		10,016
Operating Expenses:
General and Administrative	4,754		3,810		1,317		7,069		16,950
Sales and Marketing	434		18		70		7		529
Professional Fees	—		719		10		2,136		2,865
Depreciation and Amortization	365		3,166		263		228		4,022

Income (Loss) from Operations	412		(5,111)		(211)		(9,440)		(14,350)
Other (Income) Expense:
Interest Expense	26		722		66		481		1,295


Gain on Change in Fair Value of Derivative Asset and Liability	—		(409)		—		—		(409)


Other (Income) Expense, Net	(77)		14		6		(1,231)		(1,288)
Total Other (Income) Expense Net	(51)		327		72		(750)		(402)
Income (Loss) Before Income Taxes	$	463	$	(5,438)	$	(283)	$	(8,690)	$	(13,948)
Total Assets as of March 31, 2026	$	17,794	$	259,966	$	16,595	$	30,998	$	325,353

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

Operations by reportable segment for the three months ended March 31, 2025 were as follows (in thousands):


	Three Months Ended March 31, 2025
	Retail		Wholesale Biomass		CPG		Corporate and Other		Total
Revenues, Net	$	11,788	$	28,283	$	4,747	$	—	$	44,818
Cost of Goods Sold	6,135		15,092		3,526		—		24,753
Gross Profit	5,653		13,191		1,221		—		20,065
Operating Expenses:
General and Administrative	4,585		3,906		1,146		5,446		15,083
Sales and Marketing	453		133		96		5		687
Professional Fees	1		135		16		1,516		1,668
Depreciation and Amortization	370		3,028		191		248		3,837
Impairment Expense for Intangible Assets	—		—		—		1,900		1,900
Income (Loss) from Operations	244		5,989		(228)		(9,115)		(3,110)
Other (Income) Expense:
Interest Expense	35		423		5		1,813		2,276
Interest Income	—		(288)		—		—		(288)
Gain on Equity Method Investments	—		—		—		(40)		(40)
Loss on Change in Fair Value of Derivative Asset	—		1,489		—		244		1,733
Gain on Change in Fair Value of Contingent Liabilities and Shares Payable	—		—		—		(95)		(95)
Loss on Extinguishment of Debt	—		—		—		292		292
Other (Income) Expense, Net	(82)		176		—		(2)		92
Total Other (Income) Expense Net	(47)		1,800		5		2,212		3,970
Income (Loss) Before Income Taxes	$	291	$	4,189	$	(233)	$	(11,327)	$	(7,080)
Total Assets as of December 31, 2025	$	18,411	$	249,120	$	17,631	$	33,395	$	318,557

20. SUBSEQUENT EVENTS

Strategic Retail Arrangement with Vireo Growth Inc.

On April 9, 2026, Glass House Brands Inc. entered into certain agreements with Vireo Growth Inc. (“Vireo”) to form a retail-focused strategic arrangement (the “Retail Joint Venture”) to acquire and operate cannabis dispensaries in California.

The arrangement with Vireo contemplates that, subject to regulatory approvals and other closing conditions, the parties will contribute their respective California dispensary operations to the Retail Joint Venture in exchange for equal ownership interests. The arrangement also includes call and put rights between the parties that become exercisable after five years.

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GLASS HOUSE BRANDS INC.

Notes to Unaudited Condensed Interim Consolidated Financial Statements

(Amounts Expressed in United States Dollars Unless Otherwise Stated)

As of March 31, 2026, no assets or liabilities have been contributed and the Retail Joint Venture has not commenced operations.

Department of Justice and Drug Enforcement Administration Rescheduling Order

On April 23, 2026, the U.S. Department of Justice and the Drug Enforcement Administration issued an order (the “Rescheduling Order”) placing FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III. Marijuana products sold for adult-use recreational purposes remain classified as Schedule I controlled substances. On May 6, 2026, the Company announced that it had submitted applications to register certain California-licensed medical cannabis operations with the U.S. Drug Enforcement Administration pursuant to the expedited registration pathway established by the Rescheduling Order. The Company is continuing to evaluate the potential impact of the Rescheduling Order on its financial statements, including its tax positions.

Warrant Redemption Notice

On April 28, 2026, the Company announced that it has delivered a notice of redemption, dated April 28, 2026, with respect to warrants (the “Warrants”) outstanding under the warrant agency agreement, dated May 13, 2019, between the Company and Odyssey Trust Company, as amended (the “Warrant Agency Agreement”).

As of April 28, 2026, there were 30,664,500 Warrants outstanding, each exercisable for one equity share (each, a “Share”) of the Company at an exercise price of US$11.50 per Share. The outstanding Warrants will be redeemed on May 28, 2026 in accordance with Section 3.4 (1) of the Warrant Agency Agreement at a redemption price of 0.011826 Shares per Warrant (the “Redemption Shares”). If the Company had not taken any action, the outstanding Warrants would have expired on June 29, 2026.

The last reported sales price of the Shares on the trading day immediately preceding the notice of redemption was $10.46.

No fractional Shares will be issued upon redemption of the Warrants and the number of Shares delivered to each holder of Warrants on the Redemption Date will be rounded down to the nearest whole number.

If a holder of Warrants wishes to exercise its warrants, it must do so in accordance with the terms thereof prior to 5:00 PM (Toronto time) on the business day immediately preceding the Redemption Date. On and after the Redemption Date, holders of Warrants shall have no further rights except to receive Redemption Shares in accordance with the Warrant Agency Agreement.

At-The-Market Program

The Company has entered into an equity distribution agreement (the “Equity Distribution Agreement”) with ATB Cormark Capital Markets, pursuant to which, the Company may from time to time sell up to $50 million of its Equity Shares in an at-the-market distribution program (the “2026 ATM Program”). The Company currently intends to use net proceeds of the 2026 ATM Program, if any, for cultivation expansion and/or general corporate purposes as well as potential acquisitions that may be identified in the future. The Company views its ATM programs as long term sources of potential capital to be accessed on an opportunistic basis, rather than servicing an immediate need.

Launch of the 2026 ATM Program is subject to the approval of CBOE Canada, the delivery of customary closing deliverables and the filing of a prospectus supplement to the Company’s base shelf prospectus dated May 16, 2024.

Since the Equity Shares will be distributed at trading prices prevailing at the time of the sale, prices may vary between purchasers and during the period of distribution. The volume and timing of sales, if any, will be determined at the sole discretion of the Company's management and in accordance with the terms of the Equity Distribution Agreement.

Sales of Equity Shares, if any, under the 2026 ATM Program are anticipated to be made in transactions that are deemed to be “at-the-market distributions” as defined in National Instrument 44-102 Shelf Distributions, as sales made directly on CBOE Canada or any other recognized Canadian “marketplace” within the meaning of National Instrument 21-101 Marketplace Operation.

- 34 -

Exhibit 99.2

GLASS HOUSE BRANDS INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND UNAUDITED RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED
MARCH 31, 2026 AND 2025

Introduction

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as of May 13, 2026 and should be read together with Glass House Brands Inc.’s (together with its wholly-owned subsidiaries, referred to as “Glass House,” the “Company,” “we,” “us” or “our”) unaudited condensed consolidated interim financial statements as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025, and the accompanying notes (the “Unaudited Condensed Consolidated Interim Financial Statements”). The financial results discussed herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and, unless otherwise noted, are expressed in United States dollars. Additional information relating to the Company can be found on SEDAR+ at www.sedarplus.ca.

Overview

Glass House, formerly known as Mercer Park Brand Acquisition Corp. (“Mercer Park”), was incorporated under the Business Corporations Act (British Columbia) on April 16, 2019. As of March 31, 2026, we are a vertically integrated cannabis company that operates in the state of California and have a certain intellectual property licensing agreement in Florida. We, through our subsidiaries, cultivate, manufacture and distribute cannabis bulk flower and trim to wholesalers and cannabis-related consumer packaged goods (“CPG”) to third-party retail stores in the state of California. We also own and operate retail cannabis stores and provide retail cannabis store management services in the state of California. Our subordinate voting shares (“Subordinate Voting Shares”), restricted voting shares (“Restricted Voting Shares”) and limited voting shares (“Limited Voting Shares,” and collectively, with the Subordinate Voting Shares and the Restricted Voting Shares, the “Equity Shares”), and certain common share purchase warrants (the “Listed Warrants”) are listed on Cboe Canada, trading under the symbols “GLAS.A.U” and “GLAS.WT.U,” respectively. The Equity Shares and Listed Warrants also trade on the OTCQX in the United States under the symbols “GLASF” and “GHBWF,” respectively. Our head office and principal address is 3645 Long Beach Boulevard, Long Beach, California 90807. Our registered office in Canada is 666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8, Canada.

Major Business Lines and Geographies

We view our financial results under three business lines – the creation of extensible wholesale cannabis biomass, cannabis-related consumer packaged goods and cannabis retail. We generate all of our cannabis revenue in the state of California as of March 31, 2026. In addition, we have a certain intellectual property licensing agreement in Florida and provide retail cannabis store management services in California.

While many cannabis businesses prioritize brand building and customer acquisition before securing a reliable product flow, we believe that in a consumer-focused CPG space, consistent delivery of high-quality product at an attractive price point is a first principle and a prerequisite for any other activity.

Cannabis Cultivation, Production and Sales

We operate multiple greenhouse cultivation facilities located in Carpinteria and Camarillo, California. Our manufacturing production facility is located in Lompoc, California. We operate an approximately 5.5 million square foot hi-tech greenhouse facility, the “Camarillo Facility,” located in Camarillo, California. On March 10, 2022, we received California state cannabis licenses and a cannabis business license from Ventura County for the Phase I retrofit of the Camarillo Facility. We completed the first harvest in June 2022. On March 1, 2023, we announced plans to commence a Phase II retrofit of an additional greenhouse, Greenhouse 5, to expand production at our Camarillo Facility. We completed the first harvest from Greenhouse 5 in the first quarter of 2024. On August 13, 2024, we announced plans to commence a Phase III retrofit of an additional greenhouse to expand production at our Camarillo Facility. On January 20, 2026, we announced that we completed the buildout of the first third of Greenhouse 2 during 2025 with initial contributions included within first quarter 2026 results. We expect full planting for the remainder of Greenhouse 2 within the second quarter of 2026. Additionally, we commenced a light retrofit and buildout of Greenhouse 4 with plans for production capabilities to target international CBD and hemp markets.

We generate revenue by selling our cannabis products in bulk at wholesale and at retail to our own and third-party dispensaries in California, such as raw cannabis, cannabis oil, and cannabis CPG. Our “Farmacy” branded retail dispensaries are located in Santa Barbara, Santa Ana, Berkeley, Isla Vista and Santa Ynez, California. Our “Natural Healing Center” or “NHC” branded retail dispensaries are located in Grover Beach, Lemoore, Morro Bay and Turlock, California. We operate one dispensary in Los Angeles, California under “The Pottery” brand. We operate a manufacturing facility in Lompoc, California. We also have a certain intellectual property licensing agreement in Florida and provide retail cannabis store management services in California.

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Strategic Retail Arrangement with Vireo Growth Inc.

As of March 31, 2026, no assets or liabilities have been contributed and the Retail Joint Venture has not commenced operations.

Market Update and Objectives

The state of California represents the largest single state-legalized adult-use and medical market for cannabis in the U.S., with an adult population of over 30 million. The California market is highly fragmented, with over 4,000 cultivation licenses in operation, over 825 distribution licenses, approximately 1,200 licensed dispensaries, greater than 600 brands and a significant illicit market. In addition, California operators face high taxes and fees, extensive regulation, heavy competition and a large illicit market. Accordingly, California operators may find it difficult to operate in this market. In 2025, we saw wholesale prices decline from 2024 exhibiting high levels of volatility, but due to our scaled operations and low cost production, we believe Glass House is best fit to operate in this difficult market. With this backdrop, we will continue to use scale in cultivation and distribution (at wholesale and through our own retail dispensaries and third-party retailers) to achieve low cost of production that will allow us to outperform competitors and build superior brand awareness and loyalty.

On August 30, 2023, the Department of Health and Human Services recommended that marijuana be reclassified as a Schedule III controlled substance under the Controlled Substances Act (“CSA”), concluding that marijuana has a currently accepted medical use in treatment in the United States for purposes of the CSA scheduling criteria, which informed the U.S. Department of Justice’s (“DOJ”) subsequent rulemaking process. On May 21, 2024, the DOJ published a notice of proposed rulemaking (“NPRM”) proposing to transfer marijuana from Schedule I to Schedule III of the CSA. The public comment period for the NPRM concluded on July 22, 2024. In connection with the proposed rulemaking, the U.S. Drug Enforcement Administration (“DEA”) initially noticed an administrative hearing for December 2, 2024, which was later postponed to January 21, 2025. The hearing was subsequently canceled by the DEA’s Chief Administrative Law Judge due to procedural issues and pending appeals and legal actions.

Throughout 2025, the rescheduling process experienced continued delays, and there was no defined timeline for resolution of the outstanding procedural matters. In July 2025, President Donald Trump’s nominee to lead the DEA, Terrance Cole, was confirmed by the Senate and sworn in as Administrator of the DEA. While the administrative process to reschedule marijuana remained paused during his initial months in office, a policy development occurred on December 18, 2025, when President Trump signed an Executive Order titled “Increasing Medical Marijuana and Cannabidiol Research.” The Executive Order directs the Attorney General and the DEA to prioritize and expedite completion of the marijuana rescheduling process to the maximum extent permitted under federal law.

On April 23, 2026, the DOJ and DEA announced that they had issued an order (the “Rescheduling Order”), effective April 22, 2026, placing FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III under the CSA, while marijuana products sold for adult-use recreational purposes remain classified as Schedule I controlled substances. In connection with this action, the DOJ and DEA also terminated the prior administrative proceedings associated with the NPRM and initiated a new expedited administrative hearing process to consider the broader proposed rescheduling of marijuana from Schedule I to Schedule III, with such hearing scheduled to begin on June 29, 2026. The Rescheduling Order is limited in scope and does not broadly legalize marijuana under U.S. federal law, and the broader rescheduling process remains ongoing. On May 6, 2026, we announced that we submitted applications to register certain California-licensed medical cannabis operations with the DEA pursuant to the expedited registration pathway established by the Rescheduling Order.

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Despite these developments, the impact, timing and ultimate outcome of the rescheduling process remain uncertain and subject to completion of the administrative process, potential judicial review, and other legal and regulatory considerations. In addition, legislative uncertainty persists with respect to federal tax treatment. In February 2025, two identical bills — S. 471 and H.R. 1447 — were introduced in Congress. These bills would amend the Internal Revenue Code to preserve the application of Section 280E to marijuana-related businesses even if marijuana is reclassified as a Schedule III substance. S. 471 was referred to the Senate Committee on Finance, and H.R. 1447 was referred to the House Committee on Ways and Means. As of the date of this MD&A, neither bill has advanced out of committee or been scheduled for a floor vote.

Comparison of the Three Months Ended March 31, 2026 and 2025

The following are the results of our operations for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 (in thousands, except share and per share data):


	Three Months Ended
	March 31,
	2026		2025
Revenues, Net	$	40,515	$	44,818
Cost of Goods Sold (Exclusive of Depreciation and Amortization Shown Separately Below)	30,499		24,753
Gross Profit	10,016		20,065
Operating Expenses:
General and Administrative	16,950		15,083
Sales and Marketing	529		687
Professional Fees	2,865		1,668
Depreciation and Amortization	4,022		3,837

Impairment Expense for Intangible Assets	—		1,900
Total Operating Expenses	24,366		23,175
Loss from Operations	(14,350)		(3,110)
Other (Income) Expense:
Interest Expense	1,295		2,276
Interest Income	—		(288)
Gain on Equity Method Investments	—		(40)
(Gain) Loss on Change in Fair Value of Derivative Asset and Liability	(409)		1,733
Gain on Change in Fair Value of Contingent Liabilities and Shares Payable	—		(95)
Loss on Extinguishment of Debt	—		292
Other (Income) Expense, Net	(1,288)		92
Total Other (Income) Expense, Net	(402)		3,970
Loss from Operations Before Provision for Income Taxes	(13,948)		(7,080)
Provision for Income Taxes	3,058		2,928
Net Loss	(17,006)		(10,008)
Net Income Attributable to Non-Controlling Interest	126		52
Net Loss Attributable to the Company	$	(17,132)	$	(10,060)

Loss Per Share - Basic	$	(0.23)	$	(0.18)
Loss Per Share - Diluted	$	(0.23)	$	(0.18)

Weighted-Average Shares Outstanding - Basic	87,122,436		81,144,495
Weighted-Average Shares Outstanding - Diluted	87,122,436		81,144,495

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Revenue

Revenue for the three months ended March 31, 2026 was $40.5 million, which represents a decrease of $4.3 million, or 10%, from $44.8 million for the three months ended March 31, 2025. Biomass revenue decreased by $4.3 million, or 15%, CPG revenue decreased by $0.1 million, or 2%, and cannabis retail revenue increased by $0.1 million, or 1%, for the three months ended March 31, 2026 as compared to the same period in the prior year. The decrease in wholesale biomass revenue was primarily due to lower average selling prices of our biomass. As a result, our cultivation facilities reported $24.0 million in wholesale biomass revenue compared to $28.3 million in the same period in the prior year. CPG and retail operations revenue were relatively consistent with results from the same period in the prior year.

Cost of Goods Sold and Gross Profit

Cost of goods sold for the three months ended March 31, 2026 was $30.5 million, an increase of $5.7 million, or 23%, compared with $24.8 million for the three months ended March 31, 2025. Gross profit for the three months ended March 31, 2026 was $10.0 million, representing a gross margin of 25%, compared to a gross profit of $20.1 million, representing a gross margin of 45% for the three months ended March 31, 2025. The increase in cost of goods sold during the three months ended March 31, 2026 was primarily attributable to higher cost of production for the wholesale biomass segment. Gross profit dollars for our wholesale biomass segment decreased by $10.6 million primarily due to an increase in cost of goods sold and a decrease in revenue. Gross profit percentage for wholesale biomass was unfavorably impacted by lower average selling prices and higher unit production costs realized during the three months ended March 31, 2026 as compared to the same period in the prior year. Gross profit dollars for our retail segment increased by $0.3 million primarily due to the increase in revenue. Gross profit dollars for our CPG segment increased by $0.2 million primarily due to a decrease in cost of goods sold.

Total Operating Expenses

Total operating expenses for the three months ended March 31, 2026 was $24.4 million, an increase of $1.2 million, or 5%, compared to total operating expenses of $23.2 million for the three months ended March 31, 2025. The increase in total operating expenses was attributable to the factors described below.

General and administrative expenses for the three months ended March 31, 2026 and 2025 were $17.0 million and $15.1 million, respectively, an increase of $1.9 million, or 13%. The increase in general and administrative expenses was primarily attributed to an increase of $2.0 million in employee-related costs.

Sales and marketing expenses for the three months ended March 31, 2026 and 2025 were $0.5 million and $0.7 million, respectively, a decrease of $0.2 million, or 29%. Sales and marketing expenses were largely consistent period over period and include trade marketing, point of sale marketing for our wholesale CPG business product lines and promotions in various media outlets.

Professional fees for the three months ended March 31, 2026 and 2025 were $2.9 million and $1.7 million, respectively, an increase of $1.2 million, or 71%. The increase in professional fees was primarily driven by an increase in legal and accounting fees as compared to the same period in the prior year.

Depreciation and amortization expenses for the three months ended March 31, 2026 and 2025 were $4.0 million and $3.8 million, respectively, which was largely consistent period over period.

During the three months ended March 31, 2025, we recognized $1.9 million of other than temporary intangible asset impairment in our cannabis licenses related to our retail reportable segment as a result of updated earnings projections for unforeseen changes in the market from more than expected retail competition. There was no intangible asset impairment expense for the three months ended March 31, 2026.

Total Other (Income) Expense

Total other (income) expense for the three months ended March 31, 2026 and 2025 were income of $0.4 million and expense of $4.0 million, respectively, a change of $4.4 million, or 110%. The change was primarily due to an unfavorable change of $2.1 million in the fair value of derivative assets and liabilities, $1.3 million favorable change in foreign currency debt remeasurement and a $1.0 million favorable change in interest expense mainly resulting from a lower interest rate on the Senior Secured Credit Facility (as defined below) as compared to the Prior Credit Agreement (as defined below).

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Provision for Income Taxes

Provision for income taxes for the three months ended March 31, 2026 and 2025 was $3.1 million as compared to $2.9 million, respectively, an unfavorable change of $0.2 million, or 7%. The unfavorable change in the provision for income taxes was the result of our change in tax position.

Non-GAAP Financial Measures

In addition to providing financial measurements based on GAAP, we provide additional financial metrics that are not defined under, prepared in accordance with or a standardized financial measure under GAAP. Management uses such non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision-making, for planning and forecasting purposes and to evaluate our financial performance. These non-GAAP financial measures (collectively, the “non-GAAP financial measures”) are:


EBITDA			Net Loss (GAAP) adjusted for interest and financing costs, income taxes, depreciation, and amortization. This non-GAAP measure represents our current operating profitability and ability to generate cash flow.

Adjusted EBITDA			EBITDA (non-GAAP) adjusted for share-based compensation, stock appreciation rights expense, change in equity method investments, impairment expense for goodwill and intangible assets, change in fair value of derivative instruments, change in fair value of contingent liabilities and shares payable, loss on extinguishment of debt, employee retention tax credits, non-recurring asset casualty loss and non-recurring legal and professional fees. This non-GAAP measure represents our current operating profitability and ability to generate cash flow, excluding certain material non-cash items and other adjustments, such as non-recurring, irregular or one-time expenditures, in order to improve comparability.

Management believes that these non-GAAP financial measures assess our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. Management also believes that these non-GAAP financial measures enable investors to evaluate our operating results and future prospects in the same manner as management. These non-GAAP financial measures may also exclude certain material non-cash items, expenses and gains and other adjustments that may be unusual in nature, infrequent or that we believe are not reflective of our ongoing operating results and performance.

As there are no standardized methods of calculating these non-GAAP financial measures, our methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similarly titled measures used by others in the cannabis industry or otherwise. Accordingly, these non-GAAP financial measures are intended to provide additional information and are not intended to represent and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Such non-GAAP financial measures should only be considered in conjunction with the GAAP financial measures presented herein and in our Unaudited Condensed Interim Consolidated Financial Statements.

These supplemental non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. In addition, we believe investors use both GAAP and non-GAAP measures to assess management’s past and future decisions associated with our priorities and allocation of capital, as well as to analyze how the business operates in, or responds to, swings in economic cycles or to other events that impact the cannabis industry.

These non-GAAP financial measures exclude certain material non-cash items and certain other adjustments we believe are not reflective of our ongoing operations and performance. These non-GAAP financial measures are not intended to represent and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. These non-GAAP financial measures have important limitations as analytical tools and should not be considered in isolation or as a substitute for any standardized measure under GAAP. For example, certain of these non-GAAP financial measures:

•exclude certain tax payments that may reduce cash available to us;

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•do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

•do not reflect changes in, or cash requirements for, working capital needs; and

•do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on debt.

Other companies in the cannabis industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

Adjusted EBITDA (non-GAAP)

The following table provides a reconciliation of our Net Loss to Adjusted EBITDA (non-GAAP) for the three months ended March 31, 2026 compared to three months ended March 31, 2025 (in thousands):


	Three Months Ended
	March 31,
	2026		2025
Net Loss (GAAP)	$	(17,006)	$	(10,008)
Depreciation and Amortization	4,022		3,837
Interest, Net	1,295		1,988
Provision for Income Taxes	3,058		2,928
EBITDA (Non-GAAP)	(8,631)		(1,255)
Adjustments:
Share-Based Compensation	4,523		2,105
Stock Appreciation Rights Expense	(5)		(37)
Gain on Equity Method Investments	—		(40)

Impairment Expense for Intangible Assets	—		1,900
Change in Fair Value of Derivative Asset and Liability	(409)		1,733
Change in Fair Value of Contingent Liabilities and Shares Payable	—		(95)
Loss on Extinguishment of Debt	—		292
Employee Retention Tax Credits	—		(210)

Non-Recurring Legal and Professional Fees	349		—

Adjusted EBITDA (Non-GAAP)	$	(4,173)	$	4,393

On a non-GAAP basis, we recorded negative Adjusted EBITDA (Non-GAAP) of $4.2 million for the three months ended March 31, 2026, compared to an Adjusted EBITDA (Non-GAAP) of $4.4 million for the three months ended March 31, 2025, an unfavorable variance of $8.6 million, or 195%. The change was primarily driven by a decrease of $10.0 million in gross profit, as discussed in the Cost of Goods Sold and Gross Profit section in the Comparison of the Three Months Ended March 31, 2026 and 2025 above, partially offset by $1.3 million favorable change in foreign currency debt remeasurement.

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Selected Quarterly Information

A summary of selected information for each of the quarters presented is as follows (in thousands, except per share data):


	Revenues		Net Income (Loss) Before Non-Controlling Interest		Earnings (Loss) Per Share-Basic Attributable to the Company		Earnings (Loss) Per Share-Diluted Attributable to the Company
March 31, 2026	$	40,515	$	(17,006)	$	(0.23)	$	(0.23)
December 31, 2025	38,855		(15,500)		(0.23)		(0.23)
September 30, 2025	38,444		(12,188)		(0.19)		(0.19)
June 30, 2025	59,867		8,744		0.05		0.05
March 31, 2025	44,818		(10,008)		(0.18)		(0.18)
December 31, 2024	53,039		12,159		0.10		0.09
September 30, 2024	63,821		(3,208)		(0.09)		(0.09)
June 30, 2024	53,938		10,039		0.08		0.08

Revenue for the quarter ended March 31, 2026 was $40.5 million, an increase of $1.6 million, or 4%, as compared to revenue of $38.9 million for the quarter ended December 31, 2025. The increase in revenue was primarily driven by higher biomass revenue due to higher average selling prices which offset lower biomass weight sold during the quarter. As a result, our cultivation facilities reported $24.0 million and $22.6 million for the quarters ended March 31, 2026 and December 31, 2025, respectively.

Revenue for the quarter ended December 31, 2025 was $38.9 million, which was relatively consistent with revenue of $38.4 million for the quarter ended September 30, 2025.

Revenue for the quarter ended September 30, 2025 was $38.4 million, a decrease of $21.5 million, or 36%, as compared to revenue of $59.9 million for the quarter ended June 30, 2025. The decrease in revenue was primarily driven by lower biomass sales due to reduced production resulting from labor constraints at our farms following the Federal agency actions. As a result, our cultivation facilities reported $21.2 million and $42.1 million for the quarters ended September 30, 2025 and June 30, 2025, respectively.

Revenue for the quarter ended June 30, 2025 was $59.9 million, an increase of $15.1 million, or 34%, as compared to revenue of $44.8 million for the quarter ended March 31, 2025. The increase in revenue was primarily due to an increase in biomass sales caused by higher biomass production related to the seasonality of plant cycle. As a result, our cultivation facilities reported $42.1 million and $28.3 million for the quarters ended June 30, 2025 and March 31, 2025, respectively.

Revenue for the quarter ended March 31, 2025 was $44.8 million, a decrease of $8.2 million, or 15%, as compared to revenue of $53.0 million for the quarter ended December 31, 2024. The decrease in revenue was primarily due to decreased biomass sales caused by lower biomass production related to the seasonality of plant cycle which reported $28.3 million and $36.3 million for the quarters ended March 31, 2025 and December 31, 2024, respectively.

Revenue for the quarter ended December 31, 2024 was $53.0 million, a decrease of $10.8 million, or 17%, as compared to revenue of $63.8 million for the quarter ended September 30, 2024. The decrease in revenue was primarily due to a decrease in biomass sales attributable to decreased production at the Camarillo Facility which reported $36.3 million and $47.8 million for the quarters ended December 31, 2024 and September 30, 2024, respectively.

Revenue for the quarter ended September 30, 2024 was $63.8 million, an increase of $9.9 million, or 18%, as compared to revenue of $53.9 million for the quarter ended June 30, 2024. The increase in revenue was primarily due to increased biomass sales attributable to increased production at the Camarillo Facility which reported $47.8 million and $39.1 million for the quarters ended September 30, 2024 and June 30, 2024, respectively.

Net loss for the quarter ended March 31, 2026 was $17.0 million, which represents an unfavorable change of $1.5 million, or 10%, from a net loss of $15.5 million for the quarter ended December 31, 2025. The change was primarily due to a $3.2 million decrease in gross profit partially offset by a $1.5 million decrease in general and administrative expenses.

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Net loss for the quarter ended December 31, 2025 was $15.5 million which represents an unfavorable change of $3.3 million, or 27%, from a net loss of $12.2 million for the quarter ended September 30, 2025. The unfavorable change was primarily due to a $1.9 million increase in the provision for income taxes and a $2.6 million increase in general and administrative expense. These amounts were partially offset by a $1.4 million increase in gross profit.

Net loss for the quarter ended September 30, 2025 was $12.2 million, which represents an unfavorable change of $20.9 million, or 240%, from a net income of $8.7 million for the quarter ended June 30, 2025. The change was primarily due to a $20.2 million decrease in gross profit, a $2.4 million decrease in employee retention tax credits and a $1.3 million increase in general and administrative expenses. These amounts were partially offset by a $3.9 million decrease in the provision for income taxes.

Net income for the quarter ended June 30, 2025 was $8.7 million, which represents a favorable change of $18.7 million, or 187%, from a net loss of $10.0 million for the quarter ended March 31, 2025. The change was primarily due to a $11.9 million increase in gross profit, a $4.8 million increase in employee retention tax credits, a $1.9 million decrease in other than temporary intangible asset impairments and a $1.4 million decrease in the change in fair value of derivative asset and liability partially offset by a $2.0 million increase in the provision for income taxes.

Net loss for the quarter ended March 31, 2025 was $10.0 million, which represents an unfavorable change of $22.2 million, or 182%, from a net income of $12.2 million for the quarter ended December 31, 2024. The change was primarily due to an unfavorable change of $12.2 million on the change in the fair value of contingent liabilities and shares payable, a $2.7 million decrease in gross profit, a $2.4 million increase in the provision for income taxes, a $1.9 million increase in other than temporary intangible asset impairments and a $1.7 million increase in the change in fair value of derivative asset and liability.

Net income for the quarter ended December 31, 2024 was $12.2 million which represents a favorable change of $15.4 million, or 481%, from a net loss of $3.2 million for the quarter ended September 30, 2024. The change was primarily due to a favorable change of $12.3 million on the change in the fair value of contingent liabilities and shares payable, an $8.6 million decrease in the provision for income taxes and $6.3 million of other than temporary intangible asset impairment in the prior quarter. These favorable changes were partially offset by a decrease of $10.7 million in gross profit.

Net loss for the quarter ended September 30, 2024 was $3.2 million, which represents an unfavorable change of $13.2 million, or 132%, from a net income of $10.0 million for the quarter ended June 30, 2024. The change was primarily due to an unfavorable change of $7.9 million on the change in the fair value of contingent liabilities and shares payable, $6.3 million of other than temporary intangible asset impairment in the quarter ended September 30, 2024 and an $8.7 million increase in the provision for income taxes. These unfavorable changes were partially offset by an increase of $4.8 million in gross profit and a $2.9 million decrease in general and administrative expenses.

Liquidity and Capital Resources

Overview

Historically, our primary source of liquidity has been our operations, capital contributions made by equity investors, preferred equity investors and debt issuances. We meet our current operational obligations as they become due from our current working capital and from operations. However, we have sustained losses since inception and may require additional capital in the future. As of and for the three months ended March 31, 2026, we had an accumulated deficit of $237.2 million, a net loss attributable to the Company of $17.1 million and net cash used in operating activities of $11.8 million. We estimate that based on current business operations and working capital, we will continue to meet our obligations as they become due in the short term. We generate cash from revenues and deploying our capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are primarily being utilized for capital expenditures, facility improvements, product development and marketing. We expect to continue to finance our operations, capital expenditures, facility improvements, product development and marketing primarily through cash from sales to our customers and may consider future equity issuances and debt financing arrangements.

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Liquidity risk is the risk that we will not be able to meet our financial obligations associated with financial liabilities. We manage liquidity risk through the management of our capital structure. Our approach to managing liquidity is to ensure that we will have sufficient liquidity to settle obligations and liabilities when due. In the event sufficient cash flow is not available from operating activities, we may continue to raise equity or debt capital from investors in order to meet liquidity needs. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm our business, results of operations and future prospects. There can be no assurance that such financing will be available or will be on terms acceptable to us.

Senior Secured Credit Facility

On February 28, 2025, we entered into a new senior secured credit facility for an aggregate principal amount of $50 million maturing on February 28, 2030 (the “Senior Secured Credit Facility,” as amended) with certain U.S.-based commercial banks (together, the “Senior Secured Credit Facility Lender”). Payments for the first 2 years of the term are interest only. Principal and interest payments will be made during the last 3 years based on a straight-line amortization of the loan amount over a period of 15 years beginning on April 1, 2027, with a balloon payment of the remainder of the principal due on the maturity date.

The Senior Secured Credit Facility has a floating interest rate based on the Wall Street Journal’s prime rate, which was 6.75% as of March 31, 2026, plus 1.25%. On February 28, 2025, we entered into an interest rate swap agreement with a notional amount of $50 million to convert the variability of cash flows resulting from fluctuations in variable rates to effectively set the interest rate at 8.58%. The interest rate swap agreement expires on February 28, 2030. See Note 11 – Notes Payable and Convertible Debentures to our Unaudited Condensed Consolidated Interim Financial Statements for more information.

The Senior Secured Credit Facility contains a covenant which requires us to maintain liquidity in excess of $15 million at all times. The Senior Secured Credit Facility also contains a covenant which requires us to maintain a Consolidated Fixed-Charge Coverage Ratio of at least 1.25x measured quarterly on a trailing-twelve-month basis commencing as of December 31, 2024. The Fixed-Charge Coverage Ratio is defined as Adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) minus income tax expense divided by the current portion of long-term debt plus interest expense plus the current portion of capital leases. Preferred equity dividend payments and convertible debt payments are not included in the Fixed-Charge Coverage Ratio calculation as the former can be suspended if needed and the latter can be paid in shares.

As of December 31, 2025, we were not in compliance with the Fixed-Charge Coverage Ratio financial covenant under the Senior Secured Credit Facility and also experienced certain technical events of default related to administrative and guarantor provisions, none of which related to payment obligations. As a result of these events of default, the lender had the contractual right to declare the related debt immediately due and payable. On March 16, 2026, we entered into a First Amendment and Waiver to the Senior Secured Credit Facility pursuant to which the lender waived the financial covenant violation and the related technical events of default. The amendment also suspends testing of the Fixed-Charge Coverage Ratio for the fiscal quarters ending March 31, 2026, June 30, 2026, and September 30, 2026, with covenant testing resuming for the fiscal quarter ending December 31, 2026. As a result of the waiver and covenant suspension, the lender does not have the contractual right to accelerate the debt arising from these events of default for a period greater than twelve months from December 31, 2025. Accordingly, the related debt has been classified as noncurrent as of March 31, 2026 and December 31, 2025.

See Note 11 – Notes Payable and Convertible Debentures to our Unaudited Condensed Consolidated Interim Financial Statements for more information.

We used the proceeds from the Senior Secured Credit Facility to repay the remaining balance of an existing senior secured term loan which was entered into on December 9, 2021, as amended, (the “Prior Credit Agreement”) in the amount of $40.6 million plus fees on February 28, 2025 and intend to use the remaining proceeds for working capital and general corporate purposes.

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2025 Lompoc Term Loan

On August 4, 2025, we entered into a term loan for an aggregate principal amount of $3 million maturing on August 4, 2035 (the “2025 Lompoc Term Loan”) with a U.S.-based bank (the “2025 Lompoc Term Loan Lender”). The 2025 Lompoc Term Loan requires monthly principal and interest payments commencing on September 4, 2025 and has an initial fixed interest rate of 8.5% for the first 5 years. Beginning September 4, 2030, the loan converts to a variable rate based on the Wall Street Journal prime rate plus 1%, resetting every five years, with a minimum floor rate of 5%. The loan is amortized over 25 years with a balloon payment due at maturity. Proceeds were used to acquire the remaining 76% ownership interest in a property we use and occupy for manufacturing located in Lompoc, California.

The 2025 Lompoc Term Loan includes covenants including a requirement to maintain a minimum debt service coverage ratio of 1.25x, measured annually at the guarantor level, Glass House Brands Inc. As of December 31, 2025, we were not in compliance with this financial covenant. As a result, the lender had the contractual right to declare the related debt immediately due and payable. In March 2026, the lender provided a waiver of the financial covenant violation which prevents the lender from exercising its acceleration rights for a period of at least twelve months from December 31, 2025. Accordingly, the related debt has been classified as noncurrent as of March 31, 2026 and December 31, 2025.

See Note 11 – Notes Payable and Convertible Debentures to our Unaudited Condensed Consolidated Interim Financial Statements for more information.

Greenhouse 2 Equipment Supplier Financing

On January 15, 2026, we entered into an agreement for the purchase and installation of equipment for Greenhouse 2 with an aggregate purchase price of approximately $4.7 million. The agreement includes a supplier financing arrangement for approximately $4.0 million of the purchase price. The financing bears interest at a rate of 7% and is repayable in ten equal semiannual installments over a five-year period. Payments are expected to commence approximately six months following delivery with the first installment due after installation is complete.

As of March 31, 2026, we have taken delivery of a portion of the equipment and recognized a corresponding financing liability for the delivered portion of approximately $1.1 million. No amounts have been recognized for the remaining equipment, as delivery has not yet occurred. We expect the balance of the equipment to be delivered and placed into service during the second quarter of 2026.

Preferred Equity Refinancing

On July 16, 2025, we announced a recapitalization and non-brokered private placement (collectively, the “Offering”) of Series E Convertible Preferred Stock, face value of $1,000 per share (the “Series E Convertible Preferred”), of GH Group, Inc. (“GH Group”). The Series E Convertible Preferred replaces GH Group’s existing Series B Preferred Stock (“Series B Preferred”) and Series C Preferred Stock (“Series C Preferred”). Any holders of Series B Preferred and Series C Preferred shares who elected not to exchange into the Series E Convertible Preferred were redeemed by GH Group, which effectively canceled the Series B Preferred and Series C Preferred on a go-forward basis.

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During the year ended December 31, 2025, through our subsidiary, GH Group, we issued 77,500 shares of Series E Convertible Preferred in connection with the GH Group Series E Convertible Preferred financing with an aggregate value of $77.5 million comprised of the following: (i) existing shares of Series B Preferred and Series C Preferred with aggregate face value of $58.5 million were exchanged for 58,473 shares of Series E Convertible Preferred, (ii) Series B Preferred and Series C Preferred dividends payable of $0.5 million were exchanged for 535 shares of Series E Convertible Preferred, and (iii) a new private placement of 18,492 Series E Convertible Preferred with a face value of $18.5 million. We recorded the fair value of shares of Series E Convertible Preferred in mezzanine equity in the amount of $77.5 million. During the year ended December 31, 2025, the remaining, unexchanged shares of Series B Preferred and Series C Preferred were redeemed for $18.5 million in cash.

At-The-Market Program

We commenced an at-the-market distribution program (the “ATM Program”) in December 2024 by means of a prospectus supplement dated December 2, 2024 (the “Prospectus Supplement”) to its short form base shelf prospectus dated May 16, 2024 (the “Shelf Prospectus”) with the securities regulatory authorities in all provinces and territories of Canada in connection with the ATM program. The ATM Program is pursuant to the terms of an equity distribution agreement dated November 13, 2024 (the “Equity Distribution Agreement”) with ATB Securities Inc. and Canaccord Genuity Corp., pursuant to which, we may from time to time sell up to $25 million of the Company’s Subordinate Voting Shares, Restricted Voting Shares and Limited Voting Shares (collectively, the “Equity Shares”) under the ATM Program. We intend to use the net proceeds primarily for an expansion of our facilities in Camarillo, California (the “Phase III expansion”), and/or general corporate purposes.

Since the Equity Shares will be distributed at trading prices prevailing at the time of the sale, prices may vary between purchasers and during the period of distribution. The volume and timing of sales will be determined at management’s sole discretion and in accordance with the terms of the Equity Distribution Agreement.

During the three months ended March 31, 2026, we issued 2,086,737 Equity Shares under the ATM Program at an average price of $8.98 per share for gross proceeds of $18.7 million. We received net proceeds of $18.4 million after paying commissions of $0.4 million to the sales agent for the ATM Program. During the year ended December 31, 2025, we issued 678,167 Equity Shares under the ATM Program at an average price of $9.12 per share for gross proceeds of $6.2 million. We received net proceeds of $6.1 million after paying commissions of $124 thousand to the sales agent for the ATM Program and $411 in other transaction costs. During the year ended December 31, 2024, we issued 10,000 Equity Shares under the ATM Program at an average price of $6.72 per share for gross proceeds of $67 thousand. We received net proceeds of $66 thousand after paying commissions of $1 thousand to the sales agent for the ATM Program and $276 in other transaction costs.

Financial Condition

Cash Flows

The following table summarizes our Unaudited Condensed Consolidated Interim Statements of Cash Flows from the Unaudited Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2026 and 2025 (in thousands):


	Three Months Ended
	March 31,
	2026		2025
Net Cash Provided by (Used in) Operating Activities	$	(11,755)	$	2,471
Net Cash Used in Investing Activities	(2,746)		(6,695)
Net Cash Provided by Financing Activities	19,078		4,916
Net Increase in Cash, Restricted Cash and Cash Equivalents	4,577		692
Cash, Restricted Cash and Cash Equivalents, Beginning of Period	23,350		36,923
Cash, Restricted Cash and Cash Equivalents, End of Period	$	27,927	$	37,615

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Cash Flow from Operating Activities

Net cash used in operating activities was $11.8 million for the three months ended March 31, 2026, a change of $14.3 million, or 572%, as compared to net cash provided by operating activities of $2.5 million for the three months ended March 31, 2025. The change was due to an unfavorable change in net loss, net of adjustments to reconcile net loss to net cash provided by (used in) operating activities, of $10.7 million for the three months ended March 31, 2026 as compared to the same period in the prior year primarily due to a lower gross profit as discussed in the Comparison of the Three Months Ended March 31, 2026 and 2025 above. The change was also due to an unfavorable change in net operating assets and liabilities of $3.5 million for the three months ended March 31, 2026 as compared to the same period in the prior year primarily due to an unfavorable change of $3.9 million in inventory and an unfavorable change of $2.1 million in other assets. These amounts were partially offset by a favorable change of $2.4 million in accounts payable and accrued liabilities.

Cash Flow from Investing Activities

Net cash used in investing activities was $2.7 million for the three months ended March 31, 2026, a decrease of $4.0 million, or 60%, compared to net cash used in investing activities of $6.7 million for the three months ended March 31, 2025. This decrease was primarily driven by a decrease in spending for Phase III expansion at the Camarillo property during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Cash Flow from Financing Activities

Net cash provided by financing activities was $19.1 million for the three months ended March 31, 2026, an increase of $14.2 million, or 290%, compared to net cash provided by financing activities of $4.9 million for the three months ended March 31, 2025. This increase was primarily driven by a decrease of $42.1 million of payments on notes payable primarily related to the repayment of the Previous Credit Agreement during the three months ended March 31, 2025 and $22.3 million proceeds received from the issuance of At-the-Money Shares during the three months ended March 31, 2026, partially offset by $49.1 million of proceeds received under the Senior Secured Credit Facility during the three months ended March 31, 2025.

As discussed in the Liquidity and Capital Resources section above, our primary source of liquidity has been operations, capital contributions made by equity investors and debt issuances. In the event sufficient cash flow is not available from operating activities, we may continue to raise equity capital from investors in order to meet liquidity needs.

Contractual Obligations

We have contractual obligations to make future payments, including debt agreements and lease agreements from third parties.

The following table summarizes such obligations as of March 31, 2026 (in thousands):


	2026		2027		2028-2029		After 2029		Total
	(remaining)
Notes Payable to Third Parties	$	27	$	17,822	$	7,295	$	43,691	$	68,835
Lease Obligations	2,057		2,300		1,892		1,150		7,399
Total Contractual Obligations	$	2,084	$	20,122	$	9,187	$	44,841	$	76,234

Off-Balance Sheet Arrangements

As of the date of this MD&A, we do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our results of operations or financial condition including, without limitation, such considerations as liquidity and capital resources that have not previously been discussed.

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Transactions with Related Parties

Related parties are defined as management and members of the Company and/or members of their immediate family and/or other companies and/or entities in which a board member or senior officer is a principal owner or senior executive. Other than disclosed elsewhere herein and in the Unaudited Condensed Consolidated Interim Financial Statements, related party transactions and balances are as follows:

Leases

Consulting Agreement

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Jon A. Neu Insurance

Preferred Mezzanine Equity Transactions

Critical Accounting Estimates

Use of Estimates

The preparation of the Unaudited Condensed Consolidated Interim Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the Unaudited Condensed Consolidated Interim Financial Statements and the reported amounts of total net revenue and expenses during the reporting period. We regularly evaluate significant estimates and assumptions related to the consolidation or non-consolidation of variable interest entities, estimated useful lives, depreciation of property and equipment, amortization of intangible assets, inventory valuation, share-based compensation, business combinations, goodwill impairment, long-lived asset impairment, purchased asset valuations, fair value of financial instruments, compound financial instruments, derivative assets and liabilities, deferred income tax asset valuation allowances, incremental borrowing rates, and lease terms applicable to lease contracts and going concern. These estimates and assumptions are based on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. Our actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, our future results of operations could be negatively impacted.

There have been no changes to our critical accounting estimates described in the Management’s Discussion and Analysis of financial condition and results of operations for the year ended December 31, 2025, available on SEDAR+ at www.sedarplus.ca, that have had a material impact on our Unaudited Condensed Consolidated Interim Financial Statements and related notes.

Changes in Accounting Policies Including Adoption

See Note 2 – Summary of Significant Accounting Policies to our Unaudited Condensed Consolidated Interim Financial Statements for a summary of recently adopted accounting pronouncements.

Recently Issued Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies to our Unaudited Condensed Consolidated Interim Financial Statements for a summary of recently issued accounting pronouncements.

Other Risks and Uncertainties

Credit Risk

Credit risk is the risk of a potential loss to us if a customer or third party to a financial instrument fails to meet its contractual obligations. The maximum credit exposure as of March 31, 2026 and December 31, 2025 is the carrying values of cash and cash equivalents, accounts receivable and notes receivable. We do not have significant credit risk with respect to our customers. All cash and cash equivalents are placed with major U.S. financial institutions. We provide credit to certain of our customers in the normal course of business and have established credit evaluation and monitoring processes to mitigate credit risk but have limited risk as the majority of our sales are transacted with cash.

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Liquidity Risk

Liquidity risk is the risk that we will not be able to meet our financial obligations associated with financial liabilities. We manage liquidity risk through the management of our capital structure. Our approach to managing liquidity risk is to ensure that we will have sufficient liquidity to settle obligations and liabilities when due. In the event sufficient cash flow is not available from operating activities, we may continue to raise equity or debt capital from investors in order to meet liquidity needs. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm our business, results of operations and future prospects. There can be no assurance that such financing will be available or will be on terms acceptable to us.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Cash and cash equivalents bear interest at market rates. Other than our Senior Secured Credit Facility and 2025 Lompoc Term Loan, our financial liabilities have fixed rates of interest and therefore expose us to a limited interest rate fair value risk. We use an interest rate swap to effectively convert the variable rate on our Senior Secured Credit Facility to a fixed interest rate.

Price Risk

Price risk is the risk of variability in fair value due to movements in equity or market prices. Our investments are susceptible to price risk arising from uncertainties about their future outlook, future values and the impact of market conditions. The fair value of investments in privately-held entities are based on a market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Tax Risk

Tax risk is the risk of changes in the tax environment that would have a material adverse effect on our business, results of operations, and financial condition. Currently, state licensed marijuana businesses are assessed a comparatively high effective federal tax rate due to Internal Revenue Code Section 280E (“Section 280E”), which bars businesses from deducting all expenses except their cost of goods sold when calculating federal tax liability. Based on legal interpretations, it is our position that we do not owe taxes attributable to the application of Section 280E. Any increase in tax levies resulting from additional tax measures may have a further adverse effect on our operations, while any decrease in such tax levies will be beneficial to future operations.

Foreign Exchange Risk

The Company is exposed to foreign exchange risk as certain of its debt obligations and other expenditures are denominated in currencies other than its functional currency. As a result, fluctuations in exchange rates may impact the Company’s results of operations, cash flows, and financial position, including the U.S. dollar value of outstanding obligations and the cost of goods and services purchased from certain vendors.

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Tariffs and Trade Barriers

Recently, there have been significant changes to U.S. trade policies, sanctions, legislation, treaties and tariffs, including, but not limited to, trade policies and tariffs affecting products from outside of the U.S. For example, in early 2025, the Trump Administration announced significant new tariffs on certain foreign imports into the U.S., and more specifically, from Mexico and Canada, and has proposed additional new tariffs that may be implemented in the future. On February 20, 2026, the U.S. Supreme Court in Learning Resources v. Trump, et al. (Docket No. 24-1287) ruled on the legality of certain tariffs enacted under the International Emergency Economic Powers Act (“IEEPA”). Specifically, the Court held that IEEPA does not authorize the President to impose tariffs, and therefore, such tariffs were unlawful, unconstitutional exercises of executive authority. The scope of the ruling invalidated all IEEPA-based tariffs, which resultingly were terminated and triggered massive refund obligations to importers. However, other tariffs will continue to remain in place based on different statutory authority, and new tariffs may also be imposed on goods imported to the U.S. from various countries under such different statutory authority. Accordingly, the extent and duration of increased or new tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products. Any new or additional tariffs on goods imported to the U.S. from Mexico, Canada, or other countries, or products imported into the European Union or other non-U.S. markets, could also increase our costs. We are monitoring the impact of tariffs on expenses and may take additional steps to maintain profitability including expense reductions or increasing prices which may diminish demand for our products. Additionally, it is possible that U.S. policy changes and uncertainty about such changes could increase market volatility and currency exchange rate fluctuations. As a result of these dynamics, we cannot predict the impact to our business of any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries. In addition to the direct impact to our costs, the tariffs may weaken consumer confidence and may result in elevated inflation depressing discretionary consumer spending negatively impact demand for our products.

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REGULATORY ENVIRONMENT: ISSUERS WITH CANNABIS-RELATED ASSETS IN THE UNITED STATES

In accordance with Staff Notice 51-352, below is a discussion of the current federal and California regulatory regimes where the Company is currently directly and indirectly involved, through its subsidiaries and investments, in the U.S. regulated cannabis industry.

In accordance with Staff Notice 51-352, the Company evaluates, monitors and reassesses this disclosure, and any related risks, on an ongoing basis and the same will be supplemented, amended and communicated to investors in public filings, including in the event of government policy changes or the introduction of new or amended guidance, laws or regulations regarding the U.S. regulated cannabis industry. Any non-compliance, citations or notices of violation which may have an impact on the Company’s licenses, business activities, or operations will be promptly disclosed by the Company.

The Company derives its revenues from the cannabis industry in California, and such activities remain subject to significant restrictions and risks under U.S. federal law.

The Company is involved (through its licensed subsidiaries) in the regulated cannabis industry in the U.S. where state, local and territorial laws permit such activities. The legalization and regulation of cannabis for medical and adult-use purposes is being implemented at the State level in the United States, and in California, at the State and local levels. State laws regulating cannabis are in direct conflict with the federal Controlled Substances Act of 1970 (the “Substances Act” or “CSA”), which historically has listed marijuana as a Schedule I drug. On April 23, 2026, however, the DOJ and the DEA issued the Rescheduling Order, effective April 22, 2026, placing FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III of the CSA, and establishing an expedited registration process for entities holding such state medical marijuana licenses.

Although certain states and territories of the U.S. authorize medical and/or adult-use cannabis production and distribution by licensed or registered entities, under U.S. federal law, marijuana-related activities remain subject to significant federal restrictions, and the Rescheduling Order does not broadly legalize marijuana, does not by its terms broadly apply to adult-use marijuana activities, and does not complete the separate administrative process addressing the broader proposed rescheduling of marijuana from Schedule I to Schedule III. Although the Company’s activities are compliant with applicable United States state and local laws, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under United States federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company, including the risk of having assets seized.

There is currently no broad federal statutory or regulatory safe harbor protecting state-legal cannabis activities from federal enforcement, and federal authorities retain discretion to enforce applicable laws. Although the DOJ and DEA have now taken limited action with respect to FDA-approved marijuana products and marijuana products regulated by qualifying state medical marijuana licenses, that action is limited in scope and broader federal rescheduling remains pending. In addition, the regulatory framework applicable to Schedule III controlled substances differs materially from existing state-regulated cannabis programs, including with respect to registration, manufacturing, distribution, recordkeeping, and prescription requirements. There can be no assurance that the Company’s operations, even if compliant with applicable state and local laws, would be compliant with any federal requirements applicable to Schedule III substances where such requirements are determined to apply.

Currently, its subsidiaries and managed entities are directly engaged in the cultivation, manufacture, processing, sale and distribution of cannabis and hold the state and local adult-use and medical licenses required for its participation in the regulated cannabis marketplace in the state of California.

The Company’s Statement of Financial Position and Operating Statement Exposure to U.S. Cannabis Related Activities.

As of the date of this MD&A, the majority of the Company’s business was directly derived from U.S. cannabis-related activities. As such, substantially all of the Company’s statement of financial position and results of operations relate to cannabis-related activities.

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California Cannabis Market

Management believes that California, given its talent pool, wealth of brand and product expertise and superior growing conditions, is the most strategic base for expansion once cannabis is legalized at the federal level clearing the way for interstate commerce. It is management’s view that California has significant impact on global consumer trends, especially the CPG industry. In other states and around the world, California cannabis strains are often perceived as the “gold standard.” With over 30 million adult residents and approximately 271 million visitors annually, the legal market for California cannabis product sales was $4.0 billion in 2024 per the California Department of Tax and Fee Administration and is larger than any other state in the United States. It is commonly estimated by third-party sources that the total California cannabis market derived from illicit sales is materially larger than the regulated market, although such estimates are inherently uncertain. The total size of the US legal market for cannabis in 2024 was estimated at US $32.1 billion by the MJBiz Factbook, and this source projects that the market will grow to US $54.2 billion by 2029.

In 1996, California was the first state to legalize medical marijuana through Proposition 215, the Compassionate Use Act. This legalized the use, possession and cultivation of medical marijuana by patients with a physician recommendation for treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine or any other illness for which marijuana provides relief. In 2003, Senate Bill 420 was signed into law establishing an optional identification card system for medical marijuana patients.

In September 2015, the California legislature passed three bills collectively known as Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA established a general licensing and regulatory framework for medical marijuana businesses in California. The system created multiple license types for dispensaries, infused products manufacturers, cultivation facilities, testing laboratories, transportation companies, and distributors. Edible infused product manufacturers would require either volatile solvent or non-volatile solvent manufacturing licenses depending on their specific extraction methodology. Multiple agencies would oversee different aspects of the program and businesses would require a state license and local approval to operate. However, in November 2016, voters in California overwhelmingly passed Proposition 64, the Adult Use of Marijuana Act (“AUMA”) creating an adult use marijuana program for adults 21 years of age or older. AUMA had some conflicting provisions with MCRSA, so in June 2017, the California State Legislature passed Senate Bill No. 94, known as the Medical and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which combined and expanded upon MCRSA and AUMA to provide a set of comprehensive regulations to govern medical and adult use licensing regime for cannabis businesses in the State of California. MAUCRSA went into effect on January 1, 2018. The California Bureau of Cannabis Control (the “BCC”), the California Department of Food and Agriculture (the “CDFA”), the California Department of Public Health – Manufactured Cannabis Safety Branch (the “CDPH”), and the California Department of Tax and Fee Administration all had some degree of regulatory responsibility for marijuana operations. MAUCRSA became effective on January 1, 2018.

From January 2018 through mid-2021, three (3) different state programs licensed and regulated cannabis businesses: the BCC, the CDFA, and the CDPH. In July 2021, the California Department of Cannabis Control (the “DCC”) was established by consolidating the three former state cannabis authorities, the BCC, the CDFA, and the CDPH. The DCC released consolidated regulations in September 2021 aimed at:

•creating a single point of contact for licensees, local governments and other stakeholders;

•simplifying and centralizing licensing and regulatory oversight;

•supporting businesses to be successful and compliant with state law; and

•improving enforcement coordination.

In July 2019, California enacted A.B. 97. In relevant part, this bill authorized licensing authorities to issue citations and fines to a licensee or an unlicensed person who violates MAUCRSA. The maximum fine is $5,000 per violation for licensees and $30,000 per violation for unlicensed persons. Each day of a violation constitutes a separate violation. A.B. 97 also repeals a prior requirement that an applicant for a provisional license first hold a temporary license. The bill also requires applicants for provisional licenses to submit evidence of compliance with the California Environmental Quality Act (“CEQA”), limits the validity of a provisional license to 12 months with subsequent renewals as approved by the relevant licensing authority, and allows licensing authorities to revoke provisional licenses for failing to diligently pursue final licensure. Finally, the bill required the CDPH to establish a certification program for manufactured cannabis products comparable to the National Organic Program and the California Organic Food and Farming Act. In October 2019, California enacted A.B. 1529. This bill mandated that all cannabis vaping cartridges and cannabis vaporizers must include a universal symbol identifying the product as a vaping product.

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In recent years, California has continued to pass legislation impacting the state’s cannabis industry. California has brought an end to most DCC-issued provisional licenses. January 1, 2025 was the last day for the DCC to renew provisional licenses, and January 1, 2026 was the last day for any provisional license to be in effect, subject to limited exceptions for certain local-equity retailer provisional licenses.

In 2023 and 2024, California adopted cannabis-related legislation to protect job applicants from discrimination based on prior cannabis use, and, effective 2025, legislation went into effect allowing licensed cannabis dispensaries to, provided local regulations allow, operate consumption lounges. State-level taxes continue to be high. On July 1, 2025, applicable excise taxes rose by four percent to 19 percent. On September 22, 2025, California Assembly Bill 564 was signed into law, reversing the increase in the cannabis excise tax that had raised the rate to 19 percent and returning (or keeping) it at 15 percent through July 2028.

In order to legally operate a medical or adult use cannabis business in California, the operator must have both a local and state license. This requires license holders to operate in local jurisdictions with cannabis licensing programs. Therefore, local jurisdictions in California are allowed to determine the number of licenses they will issue to cannabis operators or can choose to outright ban licensed commercial cannabis activity. Local jurisdictions also are free to require additional permits, and impose ordinances, rules, and regulations that surpass state laws and regulations.

To the knowledge of management of the Company, there have not been any statements or guidance made by federal authorities or prosecutors regarding any changes to the risk of enforcement action specific to the State of California.

U.S. Federal Overview

The Controlled Substances Act

The U.S. federal government regulates drugs through the federal CSA (21 U.S.C. § 811), which places controlled substances, including cannabis (referred to under the CSA as “marihuana” but referenced herein as “cannabis”),1 in 1 of 5 different schedules. Cannabis is historically classified as a Schedule I drug; however, effective April 22, 2026, the DOJ and DEA placed, via the Rescheduling Order, FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III of the CSA. The Company notes, however, that the Rescheduling Order is limited in scope and does not itself broadly remove marijuana from Schedule I for all purposes or all activities. Moreover, to the extent marijuana is a Schedule III substance and even if marijuana were to be more broadly placed in Schedule III following completion of the administrative process, such reclassification does not and would not, in itself, legalize cannabis under federal law, and presumably subjects the Company to a distinct federal regulatory regime that is materially different from, and potentially inconsistent with, existing state cannabis regulatory frameworks.

As a Schedule I drug, the federal DEA considers cannabis to have a high potential for abuse, no currently accepted medical use in treatment in the U.S., and a lack of accepted safety for use of the drug under medical supervision.2 By notable contrast, the U.S. federal government has a separate regulatory regime regulating industrial hemp and excludes industrial hemp from cannabis; industrial hemp is defined under U.S. federal law as “any part of the plant Cannabis sativa L., including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers,” with no more than a 0.3% concentration of delta-9 tetrahydrocannabinol (“THC”) on a dry weight basis (referred to herein as “hemp” or “industrial hemp”). However, in November 2025, Congress enacted changes to the federal hemp framework (P.L. 119-37, § 781) that, among other things, tightened federal treatment of certain intoxicating hemp-derived cannabinoid products and may cause certain products that previously relied on “hemp” status to be treated as controlled substances under the CSA depending on THC content and other statutory criteria.3 Section 781 of P.L. 119-37 becomes effective 365 days after enactment, which is November 12, 2026.

1 The CSA states: “The term 'marihuana' means all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.” 21 U.S.C. § 802(16).

2 21 U.S.C. 812(b)(1).

3See Lachenmeier, DW & Rehm, J. (2015). Comparative risk assessment of alcohol, tobacco, cannabis and other illicit drugs using the margin of exposure approach. Scientific Reports, 5, 8126. doi: 10.1038/srep08126; see also Thomas, G & Davis, C. (2009). Cannabis, Tobacco and Alcohol Use in Canada: Comparing risks of harm and costs to society. Visions Journal, 5. Retrieved from http://www.heretohelp.bc.ca/sites/default/files/visions_cannabis.pdf; see also Jacobus et al. (2009). White matter integrity in adolescents with histories of marijuana use and binge drinking. Neurotoxicology and Teratology, 31, 349-355. https://doi.org/10.1016/j.ntt.2009.07.006; Could smoking pot cut risk of head, neck cancer? (2009 August 25). Retrieved from https://www.reuters.com/article/us-smoking-pot/could-smoking-pot-cut-risk-of-head-neck-cancer-idUSTRE57O5DC20090825; Watson, SJ, Benson JA Jr. & Joy, JE. (2000). Marijuana and medicine: assessing the science base: a summary of the 1999 Institute of Medicine report. Arch Gen Psychiatry Review, 57, 547-552. Retrieved from https://www.ncbi.nlm.nih.gov/pubmed/10839332; see also Hoaken, Peter N.S. & Stewart, Sherry H. (2003). Drugs of abuse and the elicitation of human aggressive behavior. Addictive Behaviours, 28, 1533-1554. Retrieved from http://www.ukcia.org/research/AgressiveBehavior.pdf; and see also Fals-Steward, W., Golden, J. & Schumacher, JA. (2003). Intimate partner violence and substance use: a longitudinal day-to-day examination. Addictive Behaviors, 28, 1555-1574. Retrieved from https://www.ncbi.nlm.nih.gov/pubmed/14656545.

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Although certain states and territories of the U.S. authorize medical or adult-use cannabis production and distribution by duly-licensed entities, under current U.S. federal law, the possession, use, cultivation, and transfer of cannabis and any related drug paraphernalia is illegal, and any such acts are criminal acts. The concepts of “medical cannabis,” “retail cannabis” and “adult-use cannabis” do not exist under U.S. federal law—there is only the Schedule I drug which remains illegal for purchase or sale. Although the Company’s activities may be materially compliant with applicable state, local and territorial laws, strict compliance with such laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law nor provide a defense to federal criminal charges that may be brought against the Company. The Rescheduling Order does not broadly legalize marijuana, does not broadly eliminate federal restrictions on adult-use marijuana activities, does not resolve the conflict between federal and state cannabis laws, and does not complete the broader federal rescheduling process now set for expedited administrative proceedings beginning June 29, 2026. In addition, the regulatory requirements applicable to Schedule III substances may impose obligations that differ materially from existing state cannabis programs, and the Company cannot assure that its operations would satisfy such federal requirements if and to the extent they are determined to apply. The Supremacy Clause of the U.S. Constitution establishes that the U.S. Constitution and federal laws made pursuant to it are paramount and, in case of conflict between federal and state law, federal law shall govern.

Nonetheless, 38 U.S. states, the District of Columbia, and the territories of Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands have legalized or decriminalized some form of cannabis for medical use, while 24 states and the District of Columbia have legalized the adult-use of cannabis for recreational purposes. Notwithstanding the foregoing, cannabis remains illegal under U.S. federal law, with cannabis listed as a Schedule I drug under the CSA.

Until 2018, the federal government provided guidance to federal law enforcement agencies and banking institutions regarding cannabis through a series of memoranda from the DOJ. The most recent such memorandum was drafted by former Deputy Attorney General James Cole on August 29, 2013 (“Cole Memorandum”).4 The Cole Memorandum offered guidance to federal enforcement agencies as to how to prioritize civil enforcement, criminal investigations and prosecutions regarding cannabis in all states, and acknowledged that, notwithstanding the designation of cannabis as a Schedule I controlled substance at the federal level, certain states have enacted laws authorizing the use of cannabis. The Cole Memorandum also noted that state jurisdictions that have enacted laws legalizing cannabis in some form have also implemented strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession of cannabis. As such, conduct in compliance with those laws and regulations is less likely to be a priority at the federal level. The Cole Memorandum was seen by many state-legal cannabis companies as a safe harbor for their licensed operations that were conducted in full compliance with all applicable state and local regulations. However, on January 4, 2018, former U.S. Attorney General Jeff Sessions rescinded the Cole Memorandum. In the absence of a uniform federal policy, as a result of the recission of the Cole Memorandum, federal prosecutors are free to utilize their prosecutorial discretion to decide whether to prosecute commercial cannabis activities despite the existence of state-level and territorial-level laws that may be inconsistent with federal prohibitions.5

Following his election, President Biden appointed Merrick Garland to serve as the U.S. Attorney General. While Attorney General Garland indicated in his confirmation hearing that he felt that enforcement of the federal cannabis prohibition against state-licensed cannabis businesses would not be a priority target of DOJ resources, no formal enforcement policy was ever issued by the Biden administration. As of the date of this MD&A, Todd Blanche, appointed by President Trump, is serving as Acting Attorney General and also holds the office of Deputy Attorney General. The Company is not aware of any formal DOJ enforcement memorandum, guidance, or other public statement by Acting Attorney General Blanche specifically addressing state-legal cannabis businesses or hemp-derived cannabinoid businesses. Accordingly, there can be no assurance that current DOJ leadership will adopt an enforcement posture materially different from the general federal risks described herein.

4See James M. Cole, Memorandum for all United States Attorneys re: Guidance Regarding Marijuana Enforcement (Aug. 29, 2013), available at https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf.

5 Please note the below discussion of the Rohrabacher-Farr Amendment, which prevents the federal government from using congressionally appropriated funds to enforce federal cannabis laws against regulated medical cannabis actors operating in compliance with state and local law, and which acts to restrict federal prosecutors from targeting many commercial cannabis operators even in lieu of the recission of the Cole Memorandum.

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On April 1, 2025, the White House stated that “no action is being considered at this time” in terms of cannabis policy.6 President Donald Trump’s nominee to lead the DEA, Terrance Cole, was confirmed and sworn in as the new Administrator of the DEA in July 2025. Mr. Cole had indicated in recent congressional testimony that examining a proposal to federally reschedule marijuana would be one of his first priorities if confirmed for the role, though a list of Mr. Cole’s strategic priorities published by the DEA following his elevation to Administrator did not include cannabis rescheduling. On April 23, 2026, the DOJ and DEA announced that they had issued the Rescheduling Order, effective April 22, 2026, placing FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III under the CSA. The DOJ and DEA also announced that they are withdrawing the prior administrative process and commencing a new expedited administrative hearing process to consider broader rescheduling of marijuana from Schedule I to Schedule III, with such hearing scheduled to begin June 29, 2026. While this action reflects a material development in federal cannabis policy, it is limited in scope and does not constitute a comprehensive resolution of marijuana’s federal legal status, including with respect to adult-use activities and the broader rescheduling process.

On December 18, 2025, President Trump issued an Executive Order addressing marijuana and cannabidiol research and federal cannabis policy, which, among other directives, instructs the Attorney General to take steps, consistent with applicable law, to expedite the federal administrative process related to moving marijuana to Schedule III of the CSA and to implement associated federal actions described in the Executive Order. The Executive Order does not itself reschedule marijuana or legalize cannabis under U.S. federal law, and any change in marijuana’s scheduling remains subject to completion of the applicable rulemaking process by the DEA. On April 23, 2026, the DOJ and DEA announced the Rescheduling Order, effective April 22, 2026, immediately placing FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III under the CSA, and had initiated a new expedited administrative hearing process to consider broader rescheduling of marijuana from Schedule I to Schedule III, with the hearing to begin June 29, 2026. The Rescheduling Order does not itself broadly legalize marijuana under U.S. federal law and does not complete the broader rescheduling process. Accordingly, broader marijuana scheduling and related federal treatment remain subject to further administrative proceedings, and there can be no assurance as to timing or outcome.

There is no guarantee that state and local laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state, local and territorial laws within their respective jurisdictions. Unless and until the U.S. Congress (“Congress”) and/or the appropriate federal regulatory agencies amend the CSA with respect to cannabis (and as to the timing or scope of any such potential amendments there can be no assurance) in a manner that makes federally legal the current state and local commercial cannabis programs, there is a risk that federal authorities may enforce current U.S. federal law.

As an industry best practice, despite the rescission of the Cole Memorandum, the Company abides by the following standard operating policies and procedures:

1.Ensure that its operations are materially compliant with all licensing requirements as established by the applicable state, county, municipality, town, township, borough, and other political/administrative divisions;

2.Ensure that its cannabis related activities materially adhere to the scope of the licensing obtained (for example: in the states where cannabis is permitted only for adult-use, the products are only sold to individuals who meet the applicable requirements);

3.Implement policies and procedures to ensure that cannabis products are not distributed to minors;

4.Implement policies and procedures to ensure that funds are not distributed to criminal enterprises, gangs or cartels;

5.Implement an inventory tracking system and necessary procedures to ensure that such compliance system is effective in tracking inventory and preventing diversion of cannabis or cannabis products into those states and territories where cannabis is not permitted by state, territorial, or local law, or across any state, territorial, or local lines in general;

6.Ensure that its state-authorized cannabis business activity is not used as a cover or pretense for trafficking of other illegal drugs, is engaged in any other illegal activity or any activities that are contrary to any applicable anti- money laundering statutes; and

7.Ensure that its products comply with applicable regulations and contain necessary disclaimers about the contents of the products to prevent adverse public health consequences from cannabis use and prevent impaired driving.

6 See “Pro-marijuana group aims to sway Trump by airing ads around White House and Mar-a-Lago,” CNN, available at https://www.cnn.com/2025/04/01/politics/trump-marijuana-ads/index.html.

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In addition, the Company conducts background checks to ensure that the principals and management of its operating subsidiaries are of good character, have not been involved with other illegal drugs, engaged in illegal activity or activities involving violence, or use of firearms in the cultivation, manufacturing or distribution of cannabis. The Company also conducts ongoing reviews of the activities of its cannabis businesses, the premises on which they operate and the policies and procedures that are related to the possession by the Company of cannabis or cannabis products of the Company outside of the licensed premises. See “Compliance and Monitoring” section herein for additional details.

One limited legislative safeguard for the medical cannabis industry currently remains in place in the form of a recurring appropriations rider commonly referred to as the “Rohrabacher-Farr Amendment” (also known as the “Rohrabacher-Blumenauer” or “Joyce-Leahy” Amendment). In enacted fiscal year 2026 appropriations legislation, Public Law 119-74, Section 531 provides that none of the funds made available under that Act to the DOJ may be used to prevent specified states and territories, including California, from implementing their own laws authorizing the use, distribution, possession, or cultivation of medical marijuana. This rider is currently in effect, but it is temporary in nature and expires with the applicable appropriations legislation at the end of the federal fiscal year on September 30, 2026, unless renewed or extended by Congress. The rider does not amend the Controlled Substances Act, does not legalize cannabis under U.S. federal law, applies only to medical marijuana programs, and does not apply to adult-use cannabis activities. Its scope and application have been subject to judicial interpretation, including limitations that it protects only conduct in strict compliance with applicable state law. In addition, the rider must be renewed through the annual appropriations process and may be modified, omitted, allowed to lapse, or interpreted narrowly in future legislation or judicial proceedings. There can be no assurance that this rider will continue to be included in future appropriations acts or that it will be interpreted or enforced in a manner favorable to the Company. Accordingly, notwithstanding its current inclusion in enacted appropriations legislation, the Company remains subject to the full risk of federal enforcement of U.S. cannabis laws.

On October 6, 2022, President Biden announced a series of marijuana-related initiatives. Included amongst them was a directive to the Secretary of Health and Human Services and the Attorney General “to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law. Federal law currently classifies marijuana in Schedule I of the CSA, the classification meant for the most dangerous substances.” This administrative review would be conducted by the FDA and the DEA. On August 30, 2023, the Department of Health and Human Services published its recommendation that marijuana should be moved to Schedule III. In April 2024, the DEA presented a proposed change rescheduling cannabis to Schedule III and opened a public comment period. That public comment period ended on July 22, 2024. The vast majority of the thousands of comments received were in favor of rescheduling. In response, two leading congressional Republicans, Rep. Cathy McMorris Rogers, who chairs the House Energy and Commerce Committee, and Rep. Brett Guthrie, who chairs the Subcommittee on Health, wrote a letter to the DOJ and the Department of Health and Human Services questioning the rescheduling process as constituting “unusual circumstances” and suggesting the DEA has doubts about rescheduling. The lawmakers pointed out that the proposed rule itself states that the “DEA has not yet made a determination as to its views of the appropriate schedule for marijuana.” The DEA had noticed its intention to convene a hearing on December 2, 2024 on the notice of proposed rulemaking. The DEA postponed the hearing to January 21, 2025, but the hearing was eventually canceled by the Chief Administrative Law Judge for the DEA (an internal administrative tribunal of the DEA) due to procedural issues and pending appeals and legal actions, and is expected to be rescheduled at a future date. The Chief Administrative Law Judge ordered a joint status update, establishing a deadline of April 21, 2025 for the parties to respond. On April 23, 2026, the DOJ and DEA announced that they are withdrawing the prior notice of hearing, terminating those proceedings, and commencing a new expedited administrative hearing process beginning June 29, 2026 to consider broader rescheduling of marijuana from Schedule I to Schedule III. DOJ stated that this action is intended to accelerate the administrative process and provide firm deadlines, but there can be no assurance as to timing or outcome.

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At present, the DEA has the final say in whether to change marijuana’s scheduling and is not bound to abide by the recommendations of the Department of Health and Human Services. Additionally, changing marijuana’s scheduling under the CSA is not equivalent to decriminalizing cannabis use, and would serve to alter, but not eliminate, federal regulation of marijuana. Altering the scheduling would mean the federal government acknowledges some medical uses of marijuana, but would not change its current status as a controlled substance prohibited for most uses under federal law; indeed, placing cannabis on a different schedule, such as Schedule III as contemplated, would have the effect of imposing a separate federal program of rules and regulations on commercial cannabis activity largely incongruent with the programs permitted under state, local and territorial laws currently in effect, and the prevailing business environment of the regulated cannabis marketplace in the U.S. The DOJ and DEA have now taken limited action to place FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III, while separately initiating expedited proceedings to consider broader rescheduling of marijuana from Schedule I to Schedule III. Even so, changing marijuana’s scheduling under the CSA is not equivalent to broadly legalizing or decriminalizing cannabis use. The Rescheduling Order is expressly limited, broader rescheduling remains pending, and any broader move to Schedule III would alter, but not eliminate, federal regulation of marijuana. As a result, the Company remains subject to a federal regulatory framework that differs materially from existing state-regulated cannabis programs and business practices. Accordingly, the Rescheduling Order should not be interpreted as a federal endorsement or approval of state-legal cannabis activities, and significant legal and regulatory uncertainty remains.

On September 27, 2023, the Senate Banking Committee passed the Secure and Fair Enforcement Regulation Banking Act (“SAFER Banking Act”) out of committee. The SAFER Banking Act has been proposed but has not been enacted into law as of the date of this filing. While some banks, credit unions and other financial services providers will provide banking services to the regulated cannabis industry, the majority of medicinal or recreational cannabis businesses do not participate in traditional banking systems due to the risks of federal prosecution. The SAFER Banking Act would include safe harbor from certain criminal, civil and administrative penalties which may otherwise result due to the status of marijuana under federal law or on the basis of a banking institution’s provision of financial services to a business that violates federal law. While marijuana would remain federally illegal under the SAFER Banking Act, the law could resolve existing tensions between federal and state law with respect to banking, lending to, and insuring a state or territorial-legal cannabis business. As of the date of this filing, the SAFER Banking Act is pending a vote on the Senate floor, but no vote has been scheduled.

The current Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) guidance (FIN-2014-G001, issued February 14, 2014) remains in line with the Cole Memorandum and details due diligence requirements, the requirement to file regular Suspicious Activity Reports for cannabis-related businesses, and compliance with Currency Transaction Reports. Existing guidelines permit banking institutions to service the regulated cannabis industry if they follow strict guidelines and comply with regular mandatory reporting relating to those entities.

Nevertheless, as of the date of this MD&A, cannabis remains a Schedule I controlled substance at the federal level. The U.S. federal government has always reserved the right to enforce federal law regarding the sale and disbursement of medical or adult-use cannabis, even if state law sanctions such sale and disbursement. If the U.S. federal government begins to enforce U.S. federal laws relating to cannabis in states and territories where the sale and use of cannabis is currently legal, or if existing applicable state, local and territorial laws are repealed or curtailed, the Company’s business, results of operations, financial condition and prospects could be materially adversely affected.

Money Laundering Laws

Under U.S. federal law, it may potentially be a violation of federal money laundering statutes for financial institutions to take any proceeds from the sale of any Schedule I controlled substance. Due to the CSA’s current categorization of marijuana as a Schedule I drug, federal law makes it illegal for financial institutions that depend on the Federal Reserve’s money transfer system to take any proceeds from marijuana sales as deposits. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to cannabis businesses under the U.S. Currency and Foreign Transactions Reporting Act of 1970 (“Bank Secrecy Act”). Therefore, under the Bank Secrecy Act, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be charged with money laundering or conspiracy.

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While there has been no change in U.S. federal banking laws to accommodate businesses in the large and increasing number of U.S. states and territories that have legalized medical and/or adult-use marijuana, in 2014, the FinCEN issued guidance to prosecutors of money laundering and other financial crimes (“FinCEN Guidance”) and notified banks that it would not seek enforcement of money laundering laws against banks that service marijuana-related businesses operating under state or territorial law, provided that strict due diligence and reporting standards are met. The FinCEN Guidance advised prosecutors not to focus their enforcement efforts on banks and other financial institutions that serve marijuana-related businesses so long as that business is legal in their state or territory and none of the federal enforcement priorities referenced in the Cole Memorandum are being violated (such as keeping marijuana away from children and out of the hands of organized crime). The FinCEN Guidance also clarifies how financial institutions can provide services to marijuana-related businesses consistent with their Bank Secrecy Act obligations, including thorough customer due diligence, but makes it clear that they are doing so at their own risk. The customer due diligence steps include:

1.Verifying with the appropriate state and territorial authorities whether the business is duly licensed and registered;

2.Reviewing the license application (and related documentation) submitted by the business for obtaining a state or territorial license to operate its marijuana-related business;

3.Requesting from state or territorial licensing and enforcement authorities available information about the business and related parties;

4.Developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the types of customers to be served (e.g., medical versus adult-use customers);

5.Ongoing monitoring of publicly available sources for adverse information about the business and related parties;

6.Ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance; and

7.Refreshing information obtained as part of customer due diligence on a periodic basis and commensurate with the risk.

With respect to information regarding state and territorial licensure obtained in connection with such customer due diligence, a financial institution may reasonably rely on the accuracy of information provided by state and territorial licensing authorities, where states and territories make such information available.

Because most banks and other financial institutions are unwilling to provide any banking or financial services to cannabis businesses, these businesses can be forced into becoming “cash-only” businesses. While the FinCEN Guidance decreased some risk for banks and financial institutions considering serving the industry, in practice it has not materially increased banks’ willingness to provide services to regulated cannabis businesses, and most banks continue to decline to operate under the strict requirements provided under the FinCEN Guidance. This is because, as described above, the current law does not provide banks immunity from prosecution, and it also requires banks and other financial institutions to undertake time-consuming and costly due diligence on each regulated cannabis business they accept as a customer.

The relatively few state-chartered banks and/or credit unions that have agreed to work with marijuana-related businesses to date are typically limiting those accounts to small percentages of their total deposits to avoid creating a liquidity risk. Since, theoretically, the federal government could change the banking laws as it relates to marijuana-related businesses at any time and without notice, these state- charted banks and credit unions must keep sufficient cash on hand to be able to return the full value of all deposits from marijuana-related businesses in a single day, while also keeping sufficient liquid capital on hand to serve their other customers. Those state-chartered banks and credit unions that do have customers in the cannabis industry charge marijuana-related businesses higher fees to pass on the added cost of ensuring compliance with the FinCEN Guidance. Unlike the Cole Memorandum, however, the FinCEN Guidance from 2014 has not been rescinded.

The Secretary of the Treasury, Scott Bessent, has not articulated an official position of the U.S. Department of the Treasury with regard to the FinCEN Guidance. Accordingly, as an industry best practice and consistent with its standard operating procedures, the Company adheres to all customer due diligence steps in the FinCEN Guidance.

In both Canada and the U.S., transactions involving banks and other financial institutions are both difficult and unpredictable under the current legal and regulatory landscape. Legislative changes could help to reduce or eliminate these challenges for companies in the cannabis space and would improve the efficiency of both significant and minor financial transactions.

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In the absence of comprehensive reform of U.S. federal cannabis legislation that would federally decriminalize the cannabis industry, a growing number of members of Congress have expressed support for federal legislation that would eliminate from the scope of federal money laundering statutes the financing activity of businesses operating under state and territorial-sanctioned cannabis programs. On September 26, 2019, the U.S. House of Representatives passed the Secured and Fair Enforcement Banking Act of 2019 (commonly known as the “SAFE Banking Act”), which aims to provide safe harbor guidance to financial institutions that work with U.S. regulated cannabis businesses. The SAFE Banking Act has since been introduced and has passed the U.S. House of Representatives several times, but has not been passed by the U.S. Senate. The SAFE Banking Act has also been proposed as a rider to federal annual budget bills and the National Defense Appropriations Act. However, such attempts have failed. As of the date of this MD&A, the SAFER Banking Act remains pending and has not yet been scheduled for a Senate floor vote. While Congress may consider legislation in the future that may permanently address these issues, there can be no assurance of the content of any proposed legislation or that such legislation is ever passed. The Company’s inability, or limitations on the Company’s ability, to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

Federal Taxation of Cannabis Businesses

An additional challenge to cannabis-related businesses is that the provisions of Section 280E of the Internal Revenue Code of 1986, as amended (“Section 280E”), are being applied punitively by the IRS to businesses operating in the medical and adult-use cannabis industry. Section 280E prohibits businesses from deducting certain expenses associated with the trafficking of controlled substances within the meaning of Schedule I and II of the CSA. The IRS has applied Section 280E broadly and punitively in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state and territorial laws, seeking substantial sums in tax liabilities, interest and penalties resulting from the underpayment of taxes due to the lack of deductibility of otherwise ordinary business expenses, the deduction of which is prohibited by Section 280E. Although the IRS has from time to time issued clarifications allowing the deduction of certain expenses that can be categorized as the cost of goods sold, the scope of such items is interpreted somewhat narrowly and disparately depending upon the type of cannabis vertical (e.g., cultivation, manufacturing, retail and distribution), and the bulk of operating costs, selling, and general administrative costs are not permitted to be deducted, especially on the retail side. Therefore, businesses in the state, local and territorial-legal cannabis industry are subject to substantially higher effective tax rates and thus may be less profitable than they would otherwise be. Notwithstanding the foregoing, there have been numerous challenges by cannabis stakeholders to the IRS’s application of Section 280E to cannabis business activities, several of which are pending resolution. Any potential change in scheduling could affect the application of Section 280E. The Rescheduling Order may affect the federal tax treatment of certain marijuana-related activities because it places FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III under the CSA. However, the scope of any resulting federal income tax consequences, including with respect to Section 280E, is not addressed in the DOJ materials cited above and remains uncertain, particularly given the limited scope of the Rescheduling Order and the pendency of broader rescheduling proceedings. Accordingly, given the limited scope of the Rescheduling Order and the nature of the Company’s operations, no assurance can be given that the Rescheduling Order will materially alter the Company’s tax treatment under Section 280E.

Service Providers

As a result of any adverse change to the approach in enforcement of U.S. federal cannabis laws, adverse regulatory or political change, additional scrutiny by regulatory authorities, adverse change in public perception in respect of the consumption of marijuana or otherwise, third party service providers to the Company could abruptly suspend or withdraw their services, which may have a material adverse effect on the Company’s business, revenues, operating results, financial condition, or prospects.

Ability to Access Capital

Given the current U.S. federal laws regarding cannabis, traditional bank financing is typically not available to U.S. cannabis companies. Specifically, the federal illegality of marijuana in the U.S. means that financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under anti-money laundering statutes, the unlicensed money transmitter statute and the Bank Secrecy Act. As a result, businesses involved in the cannabis industry often have difficulty finding bank and/or merchant processors willing to accept their business. Banks who do accept deposits from cannabis-related businesses in the U.S. must do so in compliance with the FinCEN guidance and other applicable Bank Secrecy Act obligations, both discussed above. For clarity, the DOJ’s “Cole Memorandum” was rescinded in 2018 and does not provide operative federal enforcement guidance.

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If the Company requires equity and/or debt financing to support its on-going operations, to undertake capital expenditures and to undertake acquisitions or other business combination transactions, there can be no assurance that additional financing will be available to the Company when needed or on terms which are commercially reasonable or otherwise acceptable. The Company’s inability to raise financing through traditional banking to fund its on-going operations, capital expenditures or acquisitions could limit its growth and may have a material adverse effect upon the Company’s business, results of operations, financial condition or prospects.

If additional funds are raised through further issuances of equity or convertible debt securities, existing Company shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to existing holders of Equity Shares.

Heightened Scrutiny by Regulatory Authorities

For the reasons set forth above, the Company’s existing operations in the U.S., and any future operations or investments of the Company, may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in Canada, the U.S. or elsewhere. As a result, the Company may be subject to significant direct and indirect interaction with public officials. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on the Company’s ability to operate or invest in any other jurisdiction or have consequences for its stock exchange listing or Canadian reporting obligations, in addition to those described herein.

Changes to government policy or public opinion may also result in a significant influence on the regulation of the cannabis industry in Canada, the U.S., or elsewhere. A negative shift in the public’s perception of medical or adult-use cannabis in Canada, the U.S. or any other applicable jurisdiction could affect future legislation or regulation, or enforcement. Such a shift could cause state jurisdictions to abandon initiatives or proposals to legalize medical or adult-use cannabis, thereby limiting the number of new state or territorial jurisdictions into which the Company could expand. Any inability to fully implement the Company’s business strategy in the state in which the Company currently operates may have a material adverse effect on the Company’s business, financial condition, and results of operations. See the “Risk Factors” section of the Annual Information Form for the year ended December 31, 2025, available on SEDAR+ at www.sedarplus.ca for additional details.

Further, violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions, or settlements arising from civil proceedings conducted by either the U.S. federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, asset forfeiture, and cessation of business activities or divestiture. Any enforcement action against the Company or any of its licensed operating facilities could have a material adverse effect on (1) the Company’s reputation, (2) the Company’s ability to conduct business, (3) the Company’s holdings (directly or indirectly) of medical or adult-use cannabis licenses in the U.S., (4) the listing or quoting of the Company’s securities on the Canadian stock exchange or other stock exchanges, (5) the Company’s financial position, (6) the Company’s operating results, profitability, or liquidity, or (7) the market price of the Company’s publicly traded shares. In addition, it is difficult for the Company to estimate the time or resources that would be needed for the investigation of any such matters or their final resolution because the time and resources that may be necessary depend on the nature and extent of any information requested by the applicable authorities involved, and such time or resources could be substantial. See the “Risk Factors” section of the Annual Information Form for the year ended December 31, 2025, available on SEDAR+ at www.sedarplus.ca for additional details. The Company’s business activities, and the business activities of its subsidiaries, while believed to be compliant with applicable U.S. state and local laws, currently are illegal under U.S. federal law.

Further, the CDS Clearing and Depository Services Inc. (“CDS”), Canada’s central securities depository which clears and settles trades in the Canadian equity, fixed income and money markets, indicated that it would refuse to settle trades for cannabis issuers that have investments in the U.S. The TMX Group, the owner and operator of CDS, subsequently issued a statement in August 2017 reaffirming that there is no CDS ban on the clearing of securities of issuers with cannabis-related activities in the U.S., despite media reports to the contrary and that the TMX Group was working with regulators to arrive at a solution that will clarify this matter, which would be communicated at a later time.

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In February 2018, following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group announced the signing of a Memorandum of Understanding (“MOU”) with The Aequitas NEO Exchange Inc. (now, Cboe Canada), the Canadian Securities Exchange, the Toronto Stock Exchange, and the TSX Venture Exchange. The MOU outlines the parties’ understanding of Canada’s regulatory framework applicable to the rules, procedures, and regulatory oversight of the exchanges and CDS as it relates to issuers with cannabis-related activities in the U.S. The MOU confirms, with respect to the clearing of listed securities, that CDS relies on the exchanges to review the conduct of listed issuers. As a result, there is currently no CDS ban on the clearing of the securities of issuers with cannabis-related activities in the U.S. However, there can be no guarantee that this approach to regulation will continue in the future. If such a ban were to be implemented at a time when the Company’s equity shares are listed on a stock exchange, it would have a material adverse effect on the ability of such holders to make and settle trades. In particular, such equity would become highly illiquid as until an alternative was implemented, investors would have no ability to affect a trade of securities through the facilities of the applicable stock exchange.

Compliance and Monitoring

As of the date of this MD&A, the Company believes that each of its licensed operating entities (a) holds all applicable state and local licenses to cultivate, manufacture, possess, and/or distribute cannabis in the State of California, and (b) is in good standing and in material compliance with California’s cannabis regulatory program. The Company is in material compliance with its obligations under state and local laws related to its cannabis cultivation, manufacturing, distribution and dispensary licenses, other than minor violations that would not result in a material fine, suspension, non-renewal or revocation of any relevant license.

The Company uses reasonable commercial efforts to ensure that its business is in material compliance with laws and applicable licensing requirements and engages in the regulatory and legislative process nationally and in the state where it operates through its compliance department, outside government relations consultants, cannabis industry groups and legal counsel.

The compliance department is managed by the Company’s General Counsel and Corporate Secretary, Benjamin Vega (“General Counsel”). The Company’s compliance department is charged with knowing the local regulatory processes in California and is responsible for monitoring developments with their state and local agencies and governing bodies. The compliance department regularly reports regulatory developments to the Company’s General Counsel through written and oral communications and is charged with the creation and implementation of plans regarding all regulatory developments. The Company’s General Counsel works with external legal advisors in California to ensure that the Company is in ongoing compliance with applicable state and local laws and regulations and is aware of pending legislation and regulations at both the state and local levels which may impact the Company’s ongoing operations in any material respect.

Although the Company believes that its business activities are materially compliant with applicable state and local laws, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law nor provide a defense to any federal proceeding which may be brought against the Company. Any such proceedings brought against the Company may result in a material adverse effect on the Company. The Company currently derives 100% of its revenues from the regulated cannabis industry in California. Substantially all of the Company’s statement of financial position and results of operations relate to cannabis-related activities. Cannabis activities remain subject to significant restrictions and risks under U.S. federal law. The DOJ and DEA adopted the Rescheduling Order, effective April 22, 2026, and thereby placed FDA-approved marijuana products and marijuana products regulated by a qualifying state-issued medical marijuana license in Schedule III and established an expedited registration process for qualifying state medical marijuana licensees. However, this action does not broadly legalize commercial cannabis activity under the CSA, does not broadly resolve the federal treatment of adult-use cannabis activities, and does not complete the broader rescheduling process. Accordingly, even where the Company’s cannabis-related activities are compliant with applicable state and local laws, significant federal enforcement, regulatory, tax and compliance risk remains. In particular, the Rescheduling Order does not constitute a general authorization for the Company’s business model, and any current and future application of Schedule III requirements could require substantial changes to the Company’s operations, compliance systems, and licensing structure, or could result in the Company being unable to comply with applicable federal law. There can be no assurance that the Company does or will be able to operate in a manner that is compliant with both state and federal law if and to the extent federal Schedule III requirements are applied to its activities.

In addition to the above disclosure, please see the “Risk Factors” section of the Annual Information Form for further risk factors associated with the Company’s operations for the year ended December 31, 2025, available on SEDAR+ at www.sedarplus.ca.

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California Legal Framework and How It Affects the Company’s Business

California Licensing Scheme

California’s licensing body for medical and adult-use cannabis is the Department of Cannabis Control (“DCC”). There is no limit to the number of licenses the State of California may issue; however, some local jurisdictions have a limit on the number of licenses they will issue. Each license grants one licensed premises, and the main classes of licenses are: cultivation, retailer, distributor, manufacturer, microbusiness, event organizer, and testing laboratory. Additionally, a license may not be held by, or issued to, any person holding office in, or employed by, any agency of the State of California or any of its political subdivisions when the duties of such person are associated with enforcement of laws or regulations regarding cannabis or cannabis products. Although there are no requirements for vertical integration, California does define specific cultivation license types by canopy size.

California Medical Patient Requirements

Edibles labeled as “FOR MEDICAL USE ONLY” and only available for sale to a medicinal-use patient, may contain up to 500mg THC per package (adult use limit is 100mg THC/package). Topicals labeled as “FOR MEDICAL USE ONLY” and only available for sale to a medicinal-use patient, may contain up to 2000mg THC per package (adult use limit is 1000mg THC/package).

California Recent and Proposed Legislation

On August 31, 2024, the California State legislature approved Assembly Bill 1775, which would allow local jurisdictions the authority to approve “cannabis cafes,” where licensed retail and microbusiness (with retail) facilities could sell food and nonalcoholic beverages and host live music and other performances. On September 30, 2024, Governor Newsom approved Assembly Bill 1775, making the law effective on January 1, 2025. Under current law, some California cannabis dispensaries already offer “consumption lounges” for customers to use cannabis products on-site, but they are barred from selling anything other than prepackaged snacks and drinks. As of January 1, 2025, certain food and nonalcoholic beverage sales are permitted provided the applicable local jurisdiction approves such sales activities under its relevant regulatory program.

On August 30, 2024, the California State legislature approved Senate Bill 1059, which prohibits cities or counties from including in the definition of gross receipts, for purposes of any local tax or fee on a licensed cannabis retailer, the amount of any cannabis excise tax imposed under California law or any sales and use taxes. Governor Newsom signed Senate Bill 1059 into law on September 29, 2024. Senate Bill 1059 took effect January 1, 2025, and will effectively remove a strategy for local governments to essentially compound taxation by precluding them from including amounts paid in state taxes in the tax base for a local tax.

In September 2025, AB 564 was passed into law in California, which reversed the scheduled increase in the state cannabis excise tax and maintains the excise tax rate at fifteen percent (15%) through June 30, 2028 (i.e., through the end of FY 2027–28), and the change became operative October 1, 2025.In addition, recent federal developments relating to cannabis rescheduling and broader cannabis reform initiatives in Washington, D.C. may impact the future tax and regulatory environment applicable to the cannabis industry; however, the timing, scope, and ultimate outcome of any such developments remain uncertain.

For a detailed description of risk factors associated with the Company and its operations, please see the “Risk Factors” section of the Company’s Annual Information Form for the year ended December 31, 2025, available on SEDAR+ at www.sedarplus.ca.

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REGULATORY ENVIRONMENT: ISSUERS WITH HEMP-RELATED ASSETS IN THE UNITED STATES

Below is a discussion of the current federal and California regulatory regimes where the Company may directly or indirectly be involved, through its subsidiaries and investments, in the U.S. regulated hemp industry.

The Company’s Hemp-Related Activities are Limited, Contingent, and May Not Result in Commercial Revenues.

The Company has entered into the regulated hemp industry in the U.S. where state, local and territorial laws permit such activities. As part of the California authorized state hemp program, the Company has entered into and recently renewed a partnership with the Regents of the University of California to cultivate hemp for scientific research purposes. The Company and its subsidiaries and managed entities also do, and may, directly or indirectly participate in the cultivation, manufacture, processing, sale and/or distribution of industrial hemp and products containing hemp or hemp-derived substances, and such entities possess or will possess a hemp cultivation license as required for participation in the regulated hemp marketplace. In the future, the Company may, through its wholly-owned or managed affiliates, make further investments into other companies directly and indirectly participating in the regulated hemp industry across the U.S. and internationally.

The Company’s Statement of Financial Position and Operating Statement Exposure to U.S. Hemp Related Activities.

As of the date of this MD&A, no revenues of the Company’s business were directly derived from U.S. hemp-related activities. The Company has procured from Ventura County, a local jurisdiction of California, a registration to cultivate industrial hemp and although the Company is not currently actively growing industrial hemp under this registration, the registration remains valid. As part of the California authorized state hemp program, the Company has entered into and recently renewed a partnership with the Regents of the University of California to cultivate hemp for scientific research purposes.

United States Regulation of Industrial Hemp and Hemp-Based Cannabinoids

On December 20, 2018, President Trump signed the Agriculture Improvement Act of 2018, Pub. L. 115- 334, (popularly known as the “2018 Farm Bill”) into law.7 Under the 2018 Farm Bill, industrial and commercial hemp are no longer to be classified as a Schedule I controlled substance in the U.S. The definition of “hemp” includes the plant cannabis sativa L and any part of that plant, including seeds, derivatives, extracts, cannabinoids and isomers, which contain no more than 0.3% of delta-9 THC concentration by dry weight. The 2018 Farm Bill allows states to create regulatory programs allowing for the licensed cultivation of hemp and the production of hemp-derived products. Hemp and products derived from it, such as CBD, may then be sold into commerce and transported across state lines, provided that the hemp from which any product is derived was cultivated under a license issued by an authorized state program approved by the U.S. Department of Agriculture and otherwise meets the definition of “hemp.” As of the date of this filing, however, following the effectiveness of the amendments enacted under Public Law No. 119, certain hemp-derived cannabinoid products may no longer qualify as lawful “hemp,” which could restrict or prohibit their interstate transportation notwithstanding permissive state laws.

In November 2025, Congress enacted the “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026,” H.R. 5371 (119th Cong.), which became Public Law No. 119-37 on November 12, 2025. Section 781 of Public Law 119-37 amends the federal “hemp” definition in 7 U.S.C. § 1639, and provides that these amendments take effect 365 days after enactment. As amended, the definition shifts to a “total tetrahydrocannabinols” standard, expressly including THCA, capped at not more than 0.3% on a dry-weight basis, and adds statutory exclusions that remove certain cannabinoid products from treatment as lawful “hemp.” Those exclusions include (among other things): (i) “intermediate hemp-derived cannabinoid products,” including products containing specified synthesized/manufactured cannabinoids and/or exceeding a combined total of more than 0.3% “total tetrahydrocannabinols” plus other “THC-like cannabinoids” (as determined by HHS), and (ii) “final hemp-derived cannabinoid products” exceeding a per-container threshold of 0.4 milligrams combined total (including THCA and other “THC-like cannabinoids” as determined by HHS). These amendments, once effective, can be expected to materially narrow the range of hemp-derived cannabinoid products treated as lawful “hemp” under federal law and could increase federal controlled-substance risk for non-compliant products.

7 H.R.2 - 115th Congress (2017-2018): Agriculture Improvement Act of 2018, Congress.gov (2018), https://www.congress.gov/bill/115th-congress/house-bill/2/text.

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The implementation and interpretation of these amendments will depend on forthcoming rulemaking and guidance from the FDA, HHS, and other federal agencies. In addition, Congress has introduced legislation that could modify, delay, or repeal certain aspects of these amendments prior to their effective date. Accordingly, there can be no assurance that the statutory framework described herein will be implemented as enacted or without material modification.

Despite the removal of CBD extracted from hemp and other hemp extracts produced under authorized state hemp programs excluded from the CSA, the FDA’s stated position remains that it is a prohibited act under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”) to introduce into interstate commerce a food to which CBD, THC or cannabinoids has been added, or to market a product containing these ingredients as a dietary supplement.8

The FDA continues to enforce against violations of the FD&C Act by issuing warning letters to companies marketing and selling hemp-derived products. Over the past several years, the FDA has issued warning letters to companies marketing and selling unapproved hemp-derived CBD products. The letters reiterate the agency’s position that CBD cannot be added to food and dietary supplements, and as such, the agency has targeted companies whose products violated the FD&C Act’s prohibition against: (i) marketing CBD as or in a dietary supplement, human and animal food, or food additives; (ii) marketing a dietary supplement, human and animal food, or cosmetic with disease or drug claims (i.e., claims suggesting that a product is intended to treat, cure, or prevent diseases); (iii) including a substance in human or animal food when that substance is not GRAS (generally recognized as safe); and (iv) selling products that are misbranded due to their failure to include “adequate directions for use by a layperson.” The FDA also issued a consumer update reaffirming its position that CBD cannot lawfully be added to food or marketed as a dietary supplement due to existing provisions of the FD&C Act and outlining the data and potential safety issues it is considering as part of its ongoing evaluation of potential regulatory frameworks for CBD. Notably, the FDA states that it could not conclude based on available data that CBD is “generally recognized as safe” for use in human or animal food. While this is broad and may not be applicable in all instances, it nevertheless could materially and adversely impact the Company’s business and financial condition. Further, the FDA has repeatedly stated that it will continue to police the market and enforce against CBD products. On March 22, 2021, for example, the agency issued warning letters to two companies for selling over-the-counter products labeled as containing CBD, alleging the products were illegally marketed, unapproved drugs, which were misbranded due to prominent featuring of CBD on the labeling, followed by additional warning letters issued in 2021 and 2022. The FDA’s enforcement against the unlawful sale and marketing of CBD products has to date been limited to the issuance of warning letters, but other enforcement mechanisms are available to the FDA, including civil and criminal penalties. The FDA’s current prohibition on certain hemp-derived products and the unknowns and associated risks of potential future regulations governing hemp-derived products may have a material adverse effect on the Company’s business, revenues, operating results, financial condition, or prospects.

On January 26, 2023, the FDA announced its conclusion that existing regulatory pathways are not appropriate for CBD and that a new regulatory pathway would benefit consumers by providing safeguards and oversight to manage and minimize risks related to CBD products. The agency also stated that it is prepared to work with Congress on this matter and that it “will continue to take action against CBD and other Cannabis-derived products to protect the public, in coordination with state regulatory partners, when appropriate” by “monitoring the marketplace, identifying products that pose risks and acting within our authorities.” We note that although much of the official discussion on hemp-derived products had been localized to hemp-derived CBD, other hemp-derived cannabinoids should be assumed to be included. Further, as discussed below, regulatory changes surrounding the so-called “intoxicating” hemp-derived cannabinoids also have been an area of increasing concern and regulation.

Since 2024, Congress has introduced various legislation to amend the 2018 Farm Bill for the purpose of prohibiting or curbing the commercial production, sale, and distribution of certain hemp-derived cannabinoids with an “intoxicating” effect.

As noted above, Public Law No. 119-37 in November 2025 introduced amendments to the federal hemp definition originally established by the 2018 Farm Bill (effective 365 days after enactment) that (i) adopt a “total tetrahydrocannabinols” standard (including THCA) for hemp plant material and (ii) create product-based exclusions, including a per-container THC/cannabinoid threshold for certain final hemp-derived cannabinoid products.

8 Notably, to date the FDA’s enforcement activities in respect of the sale of CBD foods and supplements has been largely focused upon those manufacturers and distributors that have made impermissible claims about the efficacy of CBD for treating certain diseases and medical conditions.

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These amendments, once effective in late 2026, are expected to directly and materially affect the legality, commercial viability, and regulatory compliance of hemp-derived cannabinoid products in which the Company may have a direct or indirect interest. The new laws will, if they become effective, directly and materially affect the legality, commercial viability, and regulatory compliance of products manufactured, distributed or otherwise produced using industrial hemp, in which the Company may have a direct or indirect interest. Hemp-derived cannabinoid products that fall outside the amended definition of “hemp,” including those exceeding applicable “total tetrahydrocannabinols” thresholds or otherwise captured by statutory exclusions, may be treated as “marihuana” or tetrahydrocannabinols under the Controlled Substances Act and, therefore, as Schedule I controlled substances under federal law.

As a result, there can be no assurance that federal law will continue to permit the manufacture, distribution, or sale of hemp-derived intoxicating products, and such changes to federal law or regulation may materially and adversely affect the business operations, prospects, and cash flows if hemp industry stakeholders.

As a result of the 2018 Farm Bill, federal law dictates that cannabinoids (like CBD and THC) derived from hemp are not a controlled substance; however, cannabinoids derived from hemp may still be considered a controlled substance under applicable state law. In addition, the federal amendments enacted in Public Law No. 119-37 (effective 365 days after enactment) exclude certain hemp-derived cannabinoid products, including specified synthesized or manufactured cannabinoids and products exceeding statutory THC or cannabinoid thresholds, from the definition of lawful “hemp,” which may cause such products to be treated as controlled substances under federal law. Individual states take varying approaches to regulating the production and sale of hemp and hemp-derived cannabinoids. Some states explicitly authorize and regulate the production and sale of hemp-derived cannabinoids (and/or products that contain them) or otherwise provide legal protection for authorized individuals to engage in commercial hemp activities. Other states, however, maintain drug laws that do not distinguish between marijuana and hemp and/or hemp-derived cannabinoids which results in hemp being classified as a controlled substance under certain state laws. State laws are in many cases not consistent between or among states and, in some instances, with federal law regarding hemp. Products regulated as “hemp” products under applicable state law may not qualify as lawful “hemp” under federal law, and such products remain subject to applicable federal controlled-substance restrictions notwithstanding more permissive state laws.

State-Level Hemp-Related Legislation

Various U.S. state and local authorities have enacted legislation and/or regulations to create regulatory programs regarding the cultivation of hemp, as well as the manufacturing and distribution of hemp products, especially hemp products containing “intoxicating” hemp-derived cannabinoids. A significant number of states have, in recent years, enacted legislation or adopted regulatory policies restricting or prohibiting hemp-derived cannabinoids with intoxicating effects (including delta-8 THC and similar compounds), imposing “total THC” standards, and/or establishing minimum age requirements for purchase. Other states have instituted bans or significant restrictions on some or all products with some or all hemp-derived cannabinoids, and others are considering legislation involving similar bans or significant restrictions. These state-level developments have contributed to increased regulatory scrutiny and have influenced ongoing federal legislative and policy considerations. Stakeholders must navigate patchwork of hemp laws and regulations that vary, and sometimes conflict between states. As a result, the regulatory and legal challenges associated with operating within the hemp industry are, generally, increasing both in terms of the quantity and complexity.

California, for instance, previously enacted Assembly Bill 45 (“AB 45”), which established a regulatory framework for the manufacture and sale of hemp-derived products, including foods, beverages, dietary supplements, and cosmetics containing hemp-derived cannabinoids such as CBD, subject to specified testing, labeling, and THC concentration requirements. AB 45 remains operative with respect to non-intoxicating hemp-derived products and is administered primarily by the CDPH. California Assembly Bill 8 (“AB 8”), however, was signed into law by Governor Gavin Newsom on October 2, 2025. The measure integrates “intoxicating hemp” and hemp-derived cannabinoids, including delta-8 THC and delta-10 THC, into the state’s regulated cannabis market. AB 8 revises the definition of “industrial hemp” to apply a “total THC” standard (encompassing delta-9 THC and its precursors) and restricts the manufacture, distribution, and retail sale of intoxicating hemp products to entities licensed under California’s cannabis regulatory framework. Once effective, the law prohibits unlicensed sales of such products, aligns testing, labeling, and packaging requirements with cannabis regulations, and expands enforcement authority for state and local agencies.

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The legislation establishes a phased implementation timeline. Certain provisions, including limitations on the use of hemp extract in foods, beverages, and dietary supplements, take effect January 1, 2026. Full statutory enforcement of the transition—under which intoxicating hemp products must be sold only through licensed cannabis channels—commences January 1, 2028. Accordingly, AB 8 creates a multi-year transition period intended to harmonize the previously unregulated hemp-derived intoxicant market with the existing cannabis control regime. Implementation of AB 8 will require additional regulatory action and guidance from state agencies, and certain aspects of its scope and enforcement remain subject to clarification.

The CDPH previously adopted emergency regulations on September 24, 2024, prohibiting the sale of hemp products containing any detectable amount of THC or other intoxicating cannabinoids and limiting sales to individuals 21 years of age or older. These emergency rules remain in effect and serve as the operative regulatory framework pending final rulemaking. CDPH has initiated permanent regulations that would codify many of the emergency provisions, and those proceedings are ongoing. AB 8 is designed to complement and ultimately supersede the emergency regime, providing a statutory foundation for continued enforcement against unregulated intoxicating hemp products until its full operative date in 2028.

As a result, California currently maintains overlapping and evolving regulatory frameworks applicable to hemp-derived products, including (i) AB 45 governing non-intoxicating hemp products, (ii) CDPH emergency regulations adopted in 2024 restricting hemp products containing detectable amounts of THC or other intoxicating cannabinoids, and (iii) AB 8, which establishes a phased transition of intoxicating hemp products into the state’s regulated cannabis market. The interaction of these frameworks remains subject to ongoing rulemaking and enforcement developments.

Holding Foreign Insiders Accountable Act

Section 8103 of the National Defense Authorization Act for Fiscal Year 2026, known as the Holding Foreign Insiders Accountable Act, amended Section 16(a) of the Exchange Act, effective March 18, 2026, to require every person who is a director or an officer of a foreign private issuer with a class of equity securities registered under Section 12 of the Exchange Act to file beneficial ownership reports with the SEC. On March 5, 2026, however, the SEC issued an order under Section 16(a)(5) exempting directors and officers of certain foreign private issuers, including directors and officers of foreign private issuers incorporated or organized in Canada and subject to Canada’s National Instrument 55-104 – Insider Reporting Requirements and Exemptions, from the Section 16(a) reporting requirements and related rules, provided that the individual director or officer is required to report transactions under the applicable qualifying foreign reporting regime and any report filed under that regime is made available to the general public in English within no more than two business days of its public posting. Directors and officers of foreign private issuers remain exempt from Sections 16(b) and 16(c) of the Exchange Act.

Shareholders’ Equity

As of March 31, 2026 and December 31, 2025, our authorized share capital was comprised of an unlimited number of (i) Subordinate Voting Shares, (ii) Restricted Voting Shares, (iii) Limited Voting Shares, (iv) Multiple Voting Shares and (v) Preferred Shares.

Multiple Voting Shares

We are authorized to issue an unlimited number of Multiple Voting Shares without nominal or par value. Holders of Multiple Voting Shares are entitled to receive notice of any meeting of shareholders of the Company, and to attend, vote and speak at such meetings, except those meetings at which only holders of a specific class of shares are entitled to vote separately as a class under the Business Corporations Act (British Columbia). On all matters upon which holders of Multiple Voting Shares are entitled to vote, each Multiple Voting Share entitles the holder thereof to 50 votes per Multiple Voting Share. Multiple Voting Shares are not entitled to dividends and are not convertible. The Multiple Voting Shares had a three (3)-year sunset period that would have expired on June 29, 2024. At our annual general and special meeting of shareholders held on June 23, 2023, shareholders passed a special resolution to amend the Articles to extend the “sunset” date for the Multiple Voting Shares to June 29, 2027, upon which they will be automatically redeemed for $0.001 per Multiple Voting Share.

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Equity Shares

In the case of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of our assets among our shareholders for the purpose of winding up our affairs, the holders of Equity Shares are entitled, subject to the prior rights of the holders of any shares of the Company ranking in priority to the Equity Shares (including any liquidation preference on any issued and outstanding Multiple Voting Shares and/or Preferred Shares), to participate ratably in the Company’s remaining property along with all holders of the other classes of Equity Shares (on a per share basis).

Exchangeable Shares of MPB Acquisition Corp.

Exchangeable Shares are part of the authorized share capital of MPB Acquisition Corp. (“MPB”), our wholly-owned subsidiary, which entitle their holders to rights that are comparable to those rights attached to the Equity Shares. The Exchangeable Shares carry one vote per share, and the aggregate voting power of the Exchangeable Shares must not exceed 49.9% of the total voting power of all classes of shares of MPB. During the three months ended September 30, 2025, MPB amended and restated its Articles of Incorporation to provide for a new series of Exchangeable Shares that has substantially the same rights and obligations of the existing Exchangeable Shares. Until a holder exchanges their Exchangeable Shares for Equity Shares, the holder of such Exchangeable Shares will not have the right to vote at meetings of the shareholders of the Company, though they will have the right to vote at meetings of the shareholders of MPB, including with respect to altering the rights of holders of any of the Exchangeable Shares, or if MPB decides to take certain actions without fully protecting the holders of any of the Exchangeable Shares, or as otherwise required by law. The Exchangeable Shares are exchangeable at any time, on a one-for-one basis, for the Equity Shares at the option of the holder.

We treat the Exchangeable Shares as options, each with a value equal to an Equity Share, which represents the holder’s claim on our equity. Pursuant to the terms of the Exchangeable Shares, we and MPB are required to maintain the economic equivalency of such Exchangeable Shares with our publicly traded Equity Shares. This means the Exchangeable Shares are required to share the same economic benefits and retain the same proportionate ownership in our assets as the holders of the Equity Shares. We have presented these Exchangeable Shares as a part of shareholders’ equity within these Unaudited Condensed Consolidated Interim Financial Statements due to (i) the fact that they are economically equivalent to the Equity Shares, and (ii) the holders of the Exchangeable Shares are subject to restrictions on transfer under U.S. securities laws but may dispose of the Exchangeable Shares without such restriction by exchanging them for Equity Shares. Changes in these assumptions would affect the presentation of the Exchangeable Shares from shareholders’ equity to non-controlling interests; however, there would be no impact on earnings per share.

Preferred Shares of GH Group, Inc.

The authorized total number of preferred shares (the “GH Group Preferred Shares”) of GH Group, Inc. is 200,000 of which 55,000 shares are designated as shares of Series B Preferred Stock (“ Series B Preferred”), 5,000 shares are designated as shares of Series C Preferred Stock (“Series C Preferred”), 15,000 shares are designated as shares of Series D Preferred Stock (“Series D Preferred”) and 80,000 shares are designated as shares of Series E Convertible Preferred Stock (“Series E Convertible Preferred”). The Series B Preferred and Series C Preferred were fully redeemed or converted and are no longer issued and outstanding.

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Shares Outstanding

As of May 1, 2026, we had 4,754,979 Multiple Voting Shares and 78,578,561 Equity Shares issued and outstanding. There were 6,366,732 Exchangeable Shares issued and outstanding in the capital of MPB Acquisition Corp. In addition, we had an aggregate of 42,367,824 warrants, 22,071 stock options, 4,648,761 Restricted Stock Units and 3,000,000 Market-Based Performance Restricted Stock Units outstanding as of May 1, 2026.

The following table summarizes the Equity Shares that were issued and outstanding as of May 1, 2026:


Equity Shares						Issued and Outstanding
Subordinate Voting Shares (SVS)						14,720,694
Restricted Voting Shares (RVS)						9,965,715
Limited Voting Shares (LVS)						53,892,152
						78,578,561

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Cautionary Note Regarding Forward-Looking Information

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking statements”). These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans,” “expects,” “is expected,” “budget,” “scheduled,” “estimates,” “continues,” “forecasts,” “projects,” “predicts,” “intends,” “anticipates” or “believes,” or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results “may,” “could,” “would,” “should,” “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. Forward looking statements include, but are not limited to: statements concerning the completion of, and matters relating to, the various proposed transactions discussed by us herein and the expected timing related thereto; our expected operations, financial results and condition; general economic trends; expectations of market size and growth in the United States and California, the State we operate in; cannabis cultivation, production and extraction capacity estimates and projections; additional funding requirements; our future objectives and strategies to achieve those objectives; our estimated cash flow and capitalization and adequacy thereof; and other statements with respect to management’s beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts.

Inherent in forward-looking statements are risks, uncertainties, and other factors beyond our ability to predict or control. Factors that could cause such differences include, but are not limited to: cannabis is a controlled substance under applicable legislation; the enforcement of cannabis laws could change; differing regulatory requirements across jurisdictions may hinder economies of scale; legal, regulatory or other political change; the unpredictable nature of the cannabis industry; regulatory scrutiny; the impact of regulatory scrutiny on the ability to raise capital; anti-money laundering laws and regulations; any reclassification of cannabis or changes in the federal legality and regulation of U.S. controlled substances; restrictions on the availability of favorable locations; enforceability of contracts; general regulatory and licensing risks; California regulatory regime and transfer and grant of licenses; limitations on ownership of licenses; regulatory action from the Food and Drug Administration; competition; ability to attract and retain customers; unfavorable publicity or consumer perception; results of future clinical research and/or controversy surrounding vaporizers and vaporizer products; limited market data and difficulty to forecast; constraints on marketing products; execution of our business strategy; reliance on management; ability to establish and maintain effective internal control over financial reporting; competition from synthetic production and technological advances; fraudulent or illegal activity by employees, contractors and consultants; product liability and recalls; risks related to product development and identifying markets for sale; dependence on suppliers, manufacturers, and contractors; reliance on inputs; reliance on equipment and skilled labor; service providers; litigation and any unexpected outcomes thereof; intellectual property risks; information technology systems, cyber-attacks, security, and privacy breaches; bonding and insurance coverage; transportation; energy costs; risks inherent in an agricultural business; management of growth; risks of leverage; future acquisitions or dispositions; difficulty attracting and retaining personnel; and past performance not being indicative of future results.

Readers are cautioned that the factors outlined herein are not an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any of our future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. Accordingly, readers should not place undue reliance on forward-looking statements. We undertake no obligation to update publicly or otherwise revise any forward-looking statements whether because of new information or future events or otherwise, except as may be required by law. If we do update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.

Disclosure Controls and Internal Control over Financial Reporting

In accordance with National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), management is responsible for establishing and maintaining adequate Disclosure Controls and Procedures (“DCP”) and Internal Control Over Financial Reporting (“ICFR”).

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Disclosure Controls and Procedures

In accordance with NI 52-109, management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of the Company’s DCP. Based on this evaluation as of March 31, 2026, and as a result of the material weakness in ICFR described below, our CEO and CFO concluded that the Company’s DCP were not effective as of such date.

Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), using criteria set forth in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

ICFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable U.S. GAAP. ICFR includes those policies and procedures that provide reasonable assurance regarding:

•the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

•the recording of transactions as necessary to permit preparation of financial statements in accordance with applicable U.S. GAAP;

•the execution of receipts and expenditures only in accordance with authorizations of management and the board of directors; and

•the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in ICFR such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Material Weakness in Internal Control over Financial Reporting

During management’s evaluation of the effectiveness of internal control over financial reporting as of December 31, 2025, management identified a material weakness related to information technology general controls (“ITGCs”) associated with certain third-party service providers supporting the Company’s primary enterprise resource planning (“ERP”) system and its retail revenue and inventory management system.

The third-party service organizations that host and support these systems did not provide Service Organization Control (“SOC”) 1 Type II reports covering the relevant period. As a result, management did not have sufficient evidence regarding the design and operating effectiveness of controls at these service organizations.

In addition, management did not maintain effective controls over system-generated reports and financial information used in financial reporting. Although certain compensating review controls were designed, such controls were not fully implemented or consistently executed and evidenced during the period.

Due to the Company’s reliance on these systems and the lack of sufficient evidence to support (i) the underlying ITGC environment at the service organizations and (ii) the completeness and accuracy of system-generated reports and financial information, management concluded that there was a reasonable possibility that a material misstatement of the consolidated financial statements would not be prevented or detected on a timely basis.

Accordingly, management determined that this deficiency constitutes a material weakness in ICFR. This material weakness is considered pervasive due to the Company’s reliance on its ERP system and its retail revenue and inventory management system, including the related system-generated reports and financial information used in financial reporting.

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Management’s Assessment of ICFR

Management evaluated the effectiveness of the Company’s ICFR as of December 31, 2025, based on the COSO framework. Based on this evaluation, and due to the material weakness described above, management concluded that the Company’s ICFR was not effective as of December 31, 2025.

Despite the material weakness described above, management believes that the Unaudited Condensed Consolidated Interim Financial Statements included in this quarterly report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented.

Remediation Plan

Management has initiated remediation actions to address the identified material weakness.

During the quarter ended March 31, 2026, the Company undertook the following actions:

•Engaged with relevant third-party service providers regarding the availability of SOC 1 Type II reports. As of March 31, 2026, one key service provider has engaged an independent accounting firm to perform a SOC 1 Type II examination, which is currently in process and is expected to cover the Company’s fiscal year 2026 reporting period.

•Designed and initiated implementation of enhanced controls over system-generated reports and financial information, including procedures to validate the completeness and accuracy of data used in financial reporting.

•Identified key reports and data dependencies used in financial reporting and initiated procedures to assess report logic, data sources, and completeness.

•Initiated the development and implementation of governance procedures over third-party service providers, including monitoring of SOC report availability and establishing procedures to evaluate service organization controls.

•Management is in the process of evaluating alternative solutions and service providers capable of providing SOC 1 Type II reports for a specific third-party application where such reports are not currently available.

These remediation activities are ongoing. The enhanced controls described above have not yet been fully implemented and have not operated for a sufficient period of time to conclude on their operating effectiveness. Accordingly, the material weakness has not been remediated as of March 31, 2026. Management will continue to execute its remediation plan and further develop and implement these controls.

Changes in Internal Control Over Financial Reporting

Except for the remediation activities described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations of Controls and Procedures

Management, including our CEO and CFO, believes that any DCP or ICFR, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations, controls are designed based on assumptions and may not operate as intended as conditions change over time, and no evaluation of controls can provide absolute assurance that all control issues or instances of fraud, if any, have been prevented or detected. These inherent limitations include the possibility of human error, circumvention of controls through collusion, or unauthorized override of controls. Accordingly, misstatements due to error or fraud may occur and not be detected.

Additional Information

Additional information relating to the Company, including our Annual Information Form for the year ended December 31, 2025, is available on SEDAR+ at www.sedarplus.ca.

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Exhibit 99.3

Form 52-109F2

Certification of Interim Filings Full Certificate

I, Mark Vendetti, Chief Financial Officer of Glass House Brands Inc., certify the following:

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Glass House Brands Inc. (the “issuer”) for the interim period ended March 31, 2026.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is based on principles set out in the Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a)a description of the material weakness;

(b)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2026 and ended on March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Dated May 13, 2026.

(signed) “Mark Vendetti”

Mark Vendetti

Chief Financial Officer

Exhibit 99.4

Form 52-109F2

Certification of Interim Filings Full Certificate

I, Kyle Kazan, Chief Executive Officer of Glass House Brands Inc., certify the following:

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a.)a description of the material weakness;

(b.)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c.)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 Limitation on scope of design: N/A

Dated May 13, 2026.

(signed) “Kyle Kazan”

Kyle Kazan

Chief Executive Officer

Source: View Original Filing on SEC EDGAR

FAQ

How did Glass House Brands (GHBWF) perform financially in Q1 2026?

Glass House Brands reported Q1 2026 revenue of $40.5 million and a net loss attributable to the company of $17.1 million. Revenue declined from $44.8 million in Q1 2025 and the loss widened from $10.1 million, reflecting weaker gross margins and higher interest and tax costs.

What was Glass House Brands’ cash and liquidity position as of March 31, 2026?

As of March 31, 2026, Glass House Brands held $24.4 million of cash and $3.5 million of non-current restricted cash. It used $11.8 million of cash in operating activities but raised $18.4 million net through at-the-market share issuances, ending with total assets of $325.4 million.

How much debt does Glass House Brands (GHBWF) have and what are the key terms?

Total notes payable were $68.8 million at March 31, 2026, including a $50 million Senior Secured Credit Facility and $14.7 million in convertible debentures. The credit facility matures in 2030, carries a floating rate swapped to an effective 8.58%, and is secured by key greenhouse assets.

Did Glass House Brands address any covenant issues on its Senior Secured Credit Facility?

Yes. The company was out of compliance with a fixed-charge coverage covenant as of December 31, 2025. On March 16, 2026, the lender waived this breach, suspended covenant testing through Q3 2026, and kept the $50 million facility classified as noncurrent on the balance sheet.

How diluted are Glass House Brands shareholders from options, warrants and convertibles?

Potentially dilutive instruments excluded from Q1 2026 diluted EPS totaled 52.8 million shares. This includes 7.8 million stock awards, 42.8 million warrants, 77,500 convertible preferred shares and 2.0 million shares from convertible debentures, all anti-dilutive given the current net loss.

What were Glass House Brands’ operating cash flows and capital spending in Q1 2026?

In Q1 2026, Glass House Brands used $11.8 million of cash in operating activities, reflecting its net loss and working capital changes. Capital expenditures were $3.5 million, partly offset by $0.8 million of proceeds from a note receivable, leading to negative free cash flow before financing.

Filing Exhibits & Attachments

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Glass House Brands (GHBWF) posts wider Q1 2026 loss but lifts cash via equity sales

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FAQ

How did Glass House Brands (GHBWF) perform financially in Q1 2026?

What was Glass House Brands’ cash and liquidity position as of March 31, 2026?

How much debt does Glass House Brands (GHBWF) have and what are the key terms?

Did Glass House Brands address any covenant issues on its Senior Secured Credit Facility?

How diluted are Glass House Brands shareholders from options, warrants and convertibles?

What were Glass House Brands’ operating cash flows and capital spending in Q1 2026?

Filing Exhibits & Attachments

Press Releases

Glass House Brands (GHBWF) posts wider Q1 2026 loss but lifts cash via equity sales

Rhea-AI Filing Summary

Positive

Negative

Insights

Equity & Credit Analyst neutral

Key Figures

Key Terms

FAQ

How did Glass House Brands (GHBWF) perform financially in Q1 2026?

What was Glass House Brands’ cash and liquidity position as of March 31, 2026?

How much debt does Glass House Brands (GHBWF) have and what are the key terms?

Did Glass House Brands address any covenant issues on its Senior Secured Credit Facility?

How diluted are Glass House Brands shareholders from options, warrants and convertibles?

What were Glass House Brands’ operating cash flows and capital spending in Q1 2026?

Filing Exhibits & Attachments

Press Releases